Schedule C and Schedule profit/loss

[sangeetmona]

I have a ebay business and I file the taxes for this under schedule C. I also have 2 rental properties that I file taxes under schedule E. My question is if I have $100 profit on schedule C and $ 90 loss on schedule E. Will my net income be $ 10 ?

Secondly, does the profit and/or loss of schedule B and D be included in above or are the treated separately.  

[tagteam]

Your net profit from Schedule C is treated as ordinary income while your loss from Schedule E may be limited by the passive activity loss rules. If that is the case, then your Schedule E loss will not offset your Schedule C net profit.

Schedule B, among other things, is used to report interest and dividends. Schedule D is used to report short-term and long-term capital gains. The federal income tax is different depending upon the type of Schedule B income and Schedule D gain (e.g., interest versus qualified dividends, short versus long term capital gain). Regardless, the income/gain from both would be factored into your tax liability.

[sangeetmona]

Thanks for quick reply. So for next year return can I file both under schedule C and offset the profit against loss ? 

[tagteam]

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@sangeetmona wrote:

....So for next year return can I file both under schedule C and offset the profit against loss ? 

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Offset the profit with the loss from what, exactly?

You can't report your rental income and expenses on Schedule C (unless you're a real estate dealer or provide substantial services for your tenants, both of which are unlikely) if that's what you're thinking.

[VolvoGirl]

You report ALL your income, Schedule C & Schedule E on your personal 1040 tax return.  Also schedule B & D for investments, etc.  If you have a loss on schedule C  it will offset your other income.  There may be limits if you have a loss on schedule E.  

If you have a loss on Schedule D......If you have investment sale losses, after you subtract the losses from your gains you can only deduct up to 3,000 (1,500 MFS) per year. The rest you will have to carryover until it is used up. You can't skip a year.

EDIT for schedule D

[tagteam]

Schedule D = capital gains and losses. 

Schedule B = interest and dividends.

[Hal_Al]

Q.  So for next year return can I file schedule C and offset the profit against my Schedule E loss? 

A. Simple answer: Yes. 

Your profit from Schedule C transfers to form 1040, as does your loss from Schedule E (as does your gain/loss from Schedule D and your interest/dividends from Schedule B), where they are combined or offset.   If your are subject to any limitations, TurboTax will do those calculations. 

[tagteam]

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@Hal_Al wrote:

Q.  So for next year return can I file schedule C and offset the profit against my Schedule E loss? 

A. Simple answer: Yes. 

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There really is no simple answer, but losses from residential rental real estate are subject to the passive activity loss rules and passive losses cannot be used to offset ordinary (nonpassive) income.

There is, however, an important exception for active participation if a taxpayer's modified adjusted gross income is within certain limits.

See https://www.irs.gov/publications/p527#en_US_2022_publink1000219124