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Level 3
posted Nov 18, 2023 6:14:32 AM

Multiple years of losses while winding down business

I know that 3 years of losses = a hobby in the eyes of the IRS, but what about at the end of a business.  I’ve had a business for 18 years with every year being profitable.  We have a lot of inventory and are slowly selling it online.  I plan to close the business in 3 years, so it will likely show 3 years of losses.   Will that be an issue ? 

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1 Replies
Level 15
Nov 18, 2023 6:59:39 AM

The factors are listed in the IRS fact sheet below (which are basically lifted from §1.183-2).

 

https://www.irs.gov/pub/irs-news/fs-08-23.pdf

 

In short, this is not likely to be an issue given your fact pattern.