In most years I have both W-2 income and 1099 income from consulting. The 1099 income goes on schedule C, and I include expenses like continuing education on my schedule C, offsetting some income.
In TY2019 I have no 1099 income for my schedule C, only W-2 income. But I hired a business coach who was quite expensive. As near as I can tell this is completely allowed as a Schedule C expense.
I have 2 questions:
1. I'd like to verify that this is a legitimate expense, even though it is not associated with any current income. The coaching will help me earn schedule C income in future years (hopefully). For reference I had income (and a profit after expenses on my schedule C!) in TY2018.
2. How big an audit risk might it be to create a schedule C as described, i.e. with expenses but no income on it? My AGI happens to be pretty low this year (it can vary up to 10x year to year) and this one expense is over 10% of my AGI. So its a huge number for this year's tax return.
Business Coaching is a legitimate expense. Unfortunately, self-employment deductions with zero income is highly audited by the IRS- mainly because it becomes a loss that offsets other income so it decreases your total income. That being said, it is not insurmountable but with caveats- if you do in fact show future income you will have less issues than if it never materializes.