There are specific conditions where you are required to file a SCH C for 2019, even if the business had no income in 2019.
- If your business has any assets (including a home office)
- If your business had any inventory left at the end of the 2018 tax year.
- If your business claimed any business vehicle use, even if that use was less than 100% business use.
If one or more of the above are true, then as far as the IRS is concerned your business was open for tax year 2019. So the IRS is expecting a SCH C from you. Either to show your business remained open for the year, or to show that you closed your business on or after Jan 1, 2019.
Your business is not considered closed until the following have been reported.
- All business assets are disposed of. Either by showing you sold those assets, or removed them for personal use.
- All vehicular assets are disposed of by the business. Either by selling the vehicle, or more commonly showing the vehicle as removed from the business for personal use.
- Your End of Year Inventory Balance must be ZERO. Now your Beginning of Year (BOY) Inventory Balance "MUST" match exactly the prior year's End of Year (EOY) Inventory Balance. So if your 2019 BOY balance is not zero, you *MUST* make the 2019 EOY balance equal zero. There's two ways to do that. Either sell the inventory, or show the inventory as removed for personal use.
- You must also show discontinuation of the home office, generally by showing it was converted back to personal use and is therefore no longer a home office.
