I have a business that has suffered loss now for two years and now going into third year. I am closing it down in 2017.
Can I still claim the loss this third year?
Is this a SCH C business? I ask, because when you close it down in 2017, you MUST file a SCH C for your 2017 taxes and make SURE you report not only that you closed, sold or otherwise disposed of the business in 2017, you also have to show the disposition of any and all business assets associated with the business too. That's important, but you can deal with that on your 2017 taxes when the time comes. We'll still be here if you need help then.
"The annual tax return for a partnership, corporation, S corporation, limited liability company or trust includes check boxes near the top front page just below the entity information. For the tax year in which your business ceases to exist, check the box that indicates this tax return is a final return. If there are Schedule K-1s, repeat the same procedure on the Schedule K-1."
No mention of Schedule C sole proprietorship.
I asked TaxACT customer support for their advice, they never mentioned anything about a special notation on Schedule C.
Yes, you can claim a Business Loss for the third year (it is not a Capital Loss).
However, you do need to be sure it is considered "business" rather than a "hobby". A business means you are definitely putting forth effort to earn a profit. See link for details.
Failure to do this will catch up to you in the form of an audit usually, about 18-24 months after the first year you don't file a SCH C, if the IRS is expecting one because you've not reported the disposition of the business previously.