Hello and thank you for using Just Answer,Yes, if your business has not been active you can leave off the Schedule C for this non active year. It is not just profit or loss you would report but the Gross Income.
If you have no absolutely no Gross income then you do not have to file the Schedule C
I do not have any gross income to report.
Remember that the IRS sees an activity as a business by looking at past years
If you have ceased to do business then the IRS may reclassify as hobby if you do sporadic work in the future years.
I did file showing a loss in the prior year, so I was a little worried that it would seem as if I was "closing" the business and that I needed to jump through some additional hoops.
Yes, that is what I was worried about. What, in general, is enough to keep the business active?
Any gross revenue?
Or just adequate business records?
If you have been in business for many years and now the activity has stopped, not lessened but stopped, you would have the last 5 years to look to for being a business
There is nothing you need to do
Just keep up with your records.
Any gross revenue? Not really sure about what you mean but I was talking about any amount your business was paid
If $0 then you do not have to file
Ok. Thank you!
You are most welcome
Your positive rating is always thanks enough
I know that this may not be answerable, but if I did have some modest business expenses, but no revenue = is it better to file with a small loss to show activity, or to eat the expenses because they are negligible and not worth the effort of filing?
Losses can only be shown for a few years before the IRS reclassifies the business to a hobby.
The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year — at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.
This means the entire years the business is filing
If you are reclassified a s a hobby your losses are limited to your income (gross)
You can not depreciate and you do not file a Schedule C
Your losses can not be used against other income. If the business brings in $1000 and you lay out $1000 you are only allowed $1000 as a loss on teh Schedule A and not even use the C
Perfect - that rule is very helpful, and I think that is what I needed to know. Thank you!
Again, your positive rating is always thanks enough.