As a side business attempt, my son tried to sell tee shirts and hats. He did it for a few months, along with his other 3 jobs, but it didn't work out. Overall he lost about $1,000.00 on the venture. Can he use TT Home and Business and use the Business section to show his business loss, den though he only did it for a few months and discontinued it all? Thanks,
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Simple answer: yes. As DianeW explained, even a short lived business is allowed to deduct losses.
But taxes aren't simple. Two (maybe more) issues to consider:
1. Was this a real profit motive business or just a hobby. The deductions are handled differently. For a full explanation, see https://www.irs.gov/newsroom/hobby-or-business-irs-offers-tips-to-decide
2. What did he do with the left over inventory. if he kept it for personal use, he does get to write off the cost as a business expense. "Personal use" includes giving it away (making gifts) to friends and family.
Simple answer: yes. As DianeW explained, even a short lived business is allowed to deduct losses.
But taxes aren't simple. Two (maybe more) issues to consider:
1. Was this a real profit motive business or just a hobby. The deductions are handled differently. For a full explanation, see https://www.irs.gov/newsroom/hobby-or-business-irs-offers-tips-to-decide
2. What did he do with the left over inventory. if he kept it for personal use, he does get to write off the cost as a business expense. "Personal use" includes giving it away (making gifts) to friends and family.
Yes, if he engaged in the activity to produce a profit, then he can choose to use the business section to report it and deduct his loss against other income.
The fact that he chooses not to pursue this business venture does not change it into a hobby. Assets, such as machinery and/or equipment cannot be depreciated when they are placed in service and removed from service in the same year.
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