This is the 3rd year for my business. I lost money in the 1st 2 years of business. Do I need to make a profit in my 3rd year?

posted

Connect with an expert

1 Best answer

Accepted Solutions

This is the 3rd year for my business. I lost money in the 1st 2 years of business. Do I need to make a profit in my 3rd year?

A business must have intent to profit and have a reasonable potential to do so or the IRS could claim your business a hobby and retract some or all your business deductions. Creating a profit 3 out of 5 years is a guideline not a mandate.

View solution in original post

1 Reply

This is the 3rd year for my business. I lost money in the 1st 2 years of business. Do I need to make a profit in my 3rd year?

A business must have intent to profit and have a reasonable potential to do so or the IRS could claim your business a hobby and retract some or all your business deductions. Creating a profit 3 out of 5 years is a guideline not a mandate.

Still have questions?