Sole proprietor business with expenses but no income

eardleec · ‎June 4, 2019

My wife operates Graphic Design business for past 10 years. Last year 2016 she had $0 income (primary customer went belly up and defunct on payments due) but normal expenses (office, Auto, utilities, etc.) Do we / can we still file a schedule C showing only the expenses. Income ($0) - Business Expenses = Losses. Is this acceptable? Does it throw up an IRS red flag? or do we just act as if the business didn't exist for 2016. PS. if it matters she had to take a regular job for part of the year.

Carl · ‎June 4, 2019

Sounds to me like what you refer to as a "primary customer" is in fact, the only customer. If you believe there is a possibility of not getting a new client in 2017, you might consider instead reporting this business as closed on 2016, since your business expenses incurred in 2016 aren't deductible anyway.

KatrinaB · ‎June 4, 2019

You can still report your expenses, but you won't receive a deduction for them. Instead, the expenses will be carried over to next year and deducted if you have business income to deduct the from.

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Sole proprietor business with expenses but no income

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