Thanks Champ. My estimated tax payment is large enough to cover the tax if my deductions are disallowed. I am more concerned with the audit and penalty. Are these likely and is the penalty large? My business is very small and in a foreign country. And if I decide the risk of penalty is not worth it, and decide not to take the deductions, what do I do? Do I just not file a Schedule C at all? Or list the loss in Schedule C but then don’t take the loss on Schedule 1 (Form 1040), line 3, and on Schedule SE, line 2? Thanks again.
