Sadly I have no income to report for 2016. I only have expenses and start up costs for my new career in real estate sales. Is this going to be an issue?

[Phillip1 · Accepted solution]

You can have (and claim) business expenses even if there was no income. However, you may want to consider the following:

1. If the current tax year included mostly start-up work and you did not really “open your doors”, the expenses you had this year would be considered start-up expenses. In this case you will track the expenses from this year, and add them to any additional start-up costs incurred this year before the business officially opens. Those start-up expenses will be deductible up to 5,000 dollars in the year that you open for business, and any start-up expenses greater than that are amortizable over a period of 15 years

2. If the business officially opened in 2016 and there was simply no income, you will deduct your business expenses in the same manner you would if there was income. However, you may want to consider filing form 5213. There is a rule that businesses that do not show a profit for 3 out of the first 5 years will be deemed a hobby. Filing form 5213 will postpone that determination until the 4th year, giving you an extra year to meet the three year requirement. (See Form 5213 and the instructions for more information about this election by clicking here: Form 5213 - Election To Postpone Determination as To Whether the Presumption Applies That an Activi...