How many years can you file a capital loss

Forum|Forum|7 years ago
June 1, 2019
7 replies
1 view

I have a business that has suffered loss now for two years and now going into third year. I am closing it down in 2017.

Can I still claim the loss this third year?

TurboTax Home & Biz Windows

Carl

Level 11

yes. There is no limit on the number of years you can claim capital losses. But there is a limit on the amount that is 'allowed" each year. You still claim the full amount. The program will "know" what the allowed amount is, if you exceed it, and takes care of it accordingly.
Is this a SCH C business? I ask, because when you close it down in 2017, you MUST file a SCH C for your 2017 taxes and make SURE you report not only that you closed, sold or otherwise disposed of the business in 2017, you also have to show the disposition of any and all business assets associated with the business too. That's important, but you can deal with that on your 2017 taxes when the time comes. We'll still be here if you need help then.

fanfare

Level 15

There doesn't seem to be any indicator on Schedule C that a business is closed, nor sold or otherwise disposed of.

Carl

Level 11

If you select the option for "this business was close, sold or disposed of in 2016", and you also correctly and completely report the disposition of all business assets, then the schedule C will have "FINAL" across the top of it. At least, that's my understanding, as I myself have not closed a SCH C business yet. I'm still operating.

sand1223Author

Level 2

It is a sole proprietorship.

fanfare

Level 15

Per the IRS website
"The annual tax return for a partnership, corporation, S corporation, limited liability company or trust includes check boxes near the top front page just below the entity information. For the tax year in which your business ceases to exist, check the box that indicates this tax return is a final return. If there are Schedule K-1s, repeat the same procedure on the Schedule K-1."

No mention of Schedule C sole proprietorship.

I asked TaxACT customer support for their advice, they never mentioned anything about a special notation on Schedule C.

sand1223Author

Level 2

ok - thanks

TaxGuyBill

Level 13

Yes, you can claim a Business Loss for the third year (it is not a Capital Loss).

However, you do need to be sure it is considered "business" rather than a "hobby". A business means you are definitely putting forth effort to earn a profit. See link for details.

https://www.irs.gov/uac/business-or-hobby-answer-has-implications-for-deductions