revenue isn't required for the SMLLC but its operations must have commenced. in and of itself there have been numerous rulings and court cases as to when business commenced. in addition, in order to take section 179 (but not 168(k) you need enough business income (before the 179 deduction) to cover it. if you have less the balance becomes a carryover to the next year
say w-2's total $25K the SMLLC loses $19k no other business income, you could take 179 on every asset acquisition that qualifies but you would only get a current year deduction for $6k
when does a business start? case study
Whether the activities constituted the carrying on of a business is determined by the facts and circumstances. The Tax Court found a taxpayer fully intended to start a business with a profit intent and spent substantial time and money. But, it held taxpayer's activities in 2010 were not proof of actually beginning business operations.
the taxpayer claimed business expenses with no income on 2010 U.S. Individual Income Tax Return, Schedule C. IRS disallowed the “business loss” saying the taxpayer did not carry on a business within the meaning and requirements of the tax laws. IRS pointed out the taxpayer did not formally advertise the business to the general public and did not do anything to try to find paying clients. IRS said the taxpayer did not establish the business was actually functioning in 2010 and the taxpayer's activities were not enough to prove the taxpayer was “in business”. The Tax Court upheld the IRS finding and the business loss claimed was not allowed.
