I run one person Multi Level Marketing products for 2 years and produced loses. Will not file any profit/expenses in 2016. How do I dispose of this business in TurboTax?

[virus52]

Need help properly dispose of Multi Level Marketing product business since I can't find customers.  I don't have profit or expenses to file.  Under Business Income and Expenses, I selected the followings:

Disposed of Business in Current Year:  Yes

Special Situations:   Actively Participates:  No

Is there anything else I should do?

Thanks 

[Carl]

Closed SCH C Business

You need to report your business as "sold or otherwise disposed of".

Start working through your business "as if" you still own it. On the 2nd or 3rd screen in select the option for "I sold, closed or otherwise disposed of this business in 2016". If prompted for the date, enter the day after you last day of business in 2016.

If your business had no income in the tax year, you can not leave the business income section blank. You 'must' enter a digit, even if that digit is a ZERO.

If you had no business expenses, then you can leave that blank and don't even have to work that section through, if you don't want to.

If your business carried an inventory, the end of year (EOY) inventory must be zero. If it's not, then in the COGS section indicate that you removed all of the remaining inventory for personal use. that effectively makes your EOY inventory balance, zero.

If your business had assets, then you must show the disposition of those assets. In the Business Assets section work through each individual asset on at a time, and select YES on the screen, "DId you stop using this asset in 2016?". Then on the next screen, "Special Handling Required?" if you sold the asset, select no and you will be prompted for your sales information on that specific asset. If you did NOT sell the asset, click the YES button. You must do this for each individual asset listed, even if it's already fully depreciated.

If you claimed any vehicle expenses in your business at any time from the day you opened your business, then you must most show the disposition of that vehicle. Work through the Business Vehicle Expenses section and indicate that you stopped using that asset in the business, when prompted. Then show your disposition of that vehicle. Most likely, you'll indicate that it was removed for personal use.

Once you have done all the above, that will make the 2016 tax year the last year you will file a SCH C for this specific business.

[virus52]

Thank you for your help Carl.   Following your advise, for vehicle expense, I ended up saying I stopped using my vehicle for business use and provided the mid year date for last use.  I am a little confused at the point where I said I converted this vehicle for personal use.  I am referring to "Conversion to Nonbusiness Use" session in TurboTax.  When I selected "yes" for conversion, it seems to indicate that I need to file recapture later.  Can you clarify on that please?  Do I need to file recapture for my personal own vehicle or not?
Thanks again

[Carl]

You would only need to report a recapture of depreciation if you sold the vehicle at a later date (after you converted it back to personal use) at a gain. Not gonna happen.
If you claimed any vehicle expenses, be it actual or per-mile (most do per-mile) then a portion of the allowed deduction was for depreciation you were allowed to take on that vehicle. What the program is telling you, is that when you do dispose of that vehicle, be it via trade-in or you sell it outright, then you have to recapture that deprecation and report it as taxable income.
The reason I don't worry about that, is because changes are so slim that you'll sell or trade in that car at a profit, it's not worth bothering with. Here's a rough (very rough) example.
You buy the car brand new in 2010 for $30,000 and immediately put it "in service" for your business. Heck, lets say you only use that car for business and nothing else. That makes it 100% business use. Now the depreciation amount of a vehicle on which you claim the per-mile deduction, depends on the tax year and the miles driven in that year. For example, in 2011 you could deduct 51 cents per mile. Of that, 22 cents per-mile was depreciation. In 2012 you could deduct 55.5 cents per mile, and of that 23 cents per mile was depreciation.
So lets use an average of 21 cents a mile over 5 years just for this scenario. Now a business vehicle traditionally puts one heck of a lot of miles on it. Easily more than 20K miles a year without even trying. So over 5 years you've to 100K miles on it. That's $21K of depreciation on a vehicle you paid $30K for. You'll probably be lucky to get $5K when you sell that car with 100K miles on it after 5 years. Even with recaptured depreciation your cost basis on the vehicle is $9K so you're still selling at a $4K loss. You've got no taxable gain on your sale of the vehicle. So why bother reporting it since you can't claim losses on the sale of personal property anyway?
Now my numbers, are "pulled out of thin air" just for the purposes of this scenario to show you the point here.

[virus52]

Best answer and explanation ever!  Thank you so much Carl!