Carl
Level 15

Business & farm

It is generally expected that a business will not show a profit in it's first three years of operation *IN GENERAL*. It just depends on what the business is. Depending on that, if you show a loss in the 4th year it may raise a few eyebrows. But nothing that you'll hear about. But in the 5th year (again, depending on what the business does) it will probably raise flags at the IRS that basically say, "lets make sure to check this return next year (year 6 of the business) and see if it shows a profit then."