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SCH C...SELF EMPLOYED INCOME...I have $0 income but I have expenses. How many years can I show $0 income on Sch C and still declare related expenses?
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June 4, 2019
8:47 PM
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Business & farm
Simple answer: 2 years.
The general rule is that if you have not turned a profit in at least three of the prior five years, the IRS will categorize your business as a hobby.
But, it depends on the other details of your activity. That rule is not automatic and you can make a case if the IRS audits you.
The IRS expects that if you start a business, you intend to make money at it. If you don't, your business is likely to be a hobby. To determine if your business is a hobby, the IRS looks at numerous factors, including the following:
- Do you put in the necessary time and effort to turn a profit?
- Have you made a profit in this activity in the past, or can you expect to make one in the future?
- Do you have the necessary knowledge to succeed in this field?
- Do you depend on income from this activity?
- Are your losses beyond your control?
June 4, 2019
8:47 PM