I started a 1 person foreign disregarded entity 3 years ago, but it has been dormant as I haven’t had time to work on it. I’ve been filing simplified 8858s as a dormant business.
My business has an EIN number. Last year (2023) I manufactured some products but haven’t had time to finish designing the package (I’m doing everything myself, except accounting in the foreign country where the business operates). So I haven’t sold any products yet, and anticipate I will start selling them in November of this year (2024)
I have about $2000 in expenses for 2023. I have other income for 2023 that the expenses can offset to save me about $200 in taxes.
But, because I haven’t made a profit yet, I am worried that if I try to deduct these Schedule C expenses for 2023, IRS will think it’s a hobby, not a business, because 2023 is my business’s third year of operation without a profit.
In 2022 I also had some expenses but did not declare them because the small amount was not worth the trouble to offset a little bit of income from other sources.
So I wonder if I should not enter these expenses on Schedule C, and instead carry them forward to a future year when I start making profits. Is that possible?
I don’t want to lose use of these legitimate expenses to offset income. But I also don’t want to be deemed a hobby.
I have a filing extension to October 15. What do you think I should do? Thanks for any help.
