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Level 2
posted Mar 17, 2020 7:02:46 AM

schedule c

I've been filing a schedule C (via Home and Business) for a very small online retail gig (actually more of a hobby) the past 12 years. In 2019, this was barely active with little income. Can I just add the income to personal and take the standard deduction or do I still have to file a schedule C until I officially close the business?

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1 Best answer
Level 15
Mar 17, 2020 7:17:07 AM

The iRS considers nine factors in distinguishing between a business and a hobby and no one factor is determinative.

 

  • Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
  • Whether the time and effort you put into the activity indicate you intend to make it profitable.
  • Whether you depend on income from the activity for your livelihood.
  • Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
  • Whether you change your methods of operation in an attempt to improve profitability.
  • Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
  • Whether you were successful in making a profit in similar activities in the past.
  • Whether the activity makes a profit in some years and how much profit it makes.
  • Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

 

See https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

 

 

You need to continue filing Schedule C as long as you have a sole proprietorship that generates income and expenses unless and until you close the business and cease operations.

2 Replies
Level 15
Mar 17, 2020 7:17:07 AM

The iRS considers nine factors in distinguishing between a business and a hobby and no one factor is determinative.

 

  • Whether you carry on the activity in a businesslike manner and maintain complete and accurate books and records.
  • Whether the time and effort you put into the activity indicate you intend to make it profitable.
  • Whether you depend on income from the activity for your livelihood.
  • Whether your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business).
  • Whether you change your methods of operation in an attempt to improve profitability.
  • Whether you or your advisors have the knowledge needed to carry on the activity as a successful business.
  • Whether you were successful in making a profit in similar activities in the past.
  • Whether the activity makes a profit in some years and how much profit it makes.
  • Whether you can expect to make a future profit from the appreciation of the assets used in the activity.

 

See https://www.irs.gov/faqs/small-business-self-employed-other-business/income-expenses/income-expenses

 

 

You need to continue filing Schedule C as long as you have a sole proprietorship that generates income and expenses unless and until you close the business and cease operations.

Expert Alumni
Mar 17, 2020 7:22:07 AM

You should continue with the Schedule C if you are depreciating assets for the business until you 'close' the business and dispose of the assets.  

 

Using the standard deduction is not related to filing Schedule C for your business income and expenses.