Yes, you are transitioning and the IRS understands that start up year is a problem.
- That is why they allow up to $5,000 of your pre-business dollars to be a direct write off.
- As long as you have records showing your activity, you will be fine. You could have spent many hours doing research that don't have a visible progress this year but will in another year or two.
- You are expected to have a profit by year 3, unless you have extenuating circumstances.
Your tone here certainly sounds like you are trying to make these 2 businesses work. The IRS also knows that most people who own a business, have 2 or more businesses.
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