When ending a business (unincorporated sole proprietorship with no employees or inventory), do we need to do anything other than check the box "I sold (or disposed of) my business in 2023"? For the question "did you dispose of the business in either of the following ways?" I selected "No" because we simply replaced it with another business. I am also wondering if this affects the vehicle and home office since we're using the exact same ones for the new business.
Here's the skinny:
My husband's cleaning business was a one-person operation. In May 2022 he retired and started collecting social security income and I took over the business. Because it's a sole proprietorship, he couldn't just transfer it into my name -- so I had to start a separate cleaning business (also an unincorporated sole proprietorship with no employees or inventory). Last year's tax return showed his business and mine as two separate Schedule C's because he earned income from his janitorial company until 4/30/22, and then beginning 5/1/22 I was the one earning income -- my new janitorial company. So ... do we just stop filing a schedule C for the old business beginning with the 2023 tax return? He has zero janitorial income and now zero expenses of course. (We report his social security income elsewhere in Turbo Tax.) He didn't sell the business to me, it dissolved and I started a different business in my name. The new janitorial business is taking expenses now for the exact same vehicle and home office as his old one. Business assets are just the home and new roof (which are depreciable), and the car. Nothing was changed to personal use. The 2022 info transferred over to this year's return in Turbo Tax.
Exactly what do we need to do in Turbo Tax to make sure we cross all our t's and dot all our i's? What do we tell the IRS, or do we need to? We're just not sure how it works and would be extremely grateful for any help figuring out how to properly handle this. Feel free to ask any clarifying questions if needed.
Thank you in advance!
