There is a difference between not having a profit and making no income. I assume people have paid you for your service at some point in the last two years? I think the original questions was if you literally received no income during the year (No one paid for your goods or service) can you still take deductions for that business. A true business can go three of five years of losses until the IRS "might" reclassify you as a hobby at some point. I wouldn't be concerned until your 5+ years in. At that point you would want to consider continuing of making a go of a business regardless of what the IRS says if you are continually losing money (not taking depreciation into consideration).
