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Dr. Fiona Chen
Dr. Fiona Chen, Certified Public Accountant (CPA)
Category: Finance
Satisfied Customers: 482
Experience:  Former IRS Revenue Agent
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I have a California S Corp. It incorporated in December

Customer Question

I have a California S Corp. It incorporated in December 2015. I invested about $35k in 2015 and another $40k in 2016 from my own money. I invested this in developing the technology and ended 2016 with about $10k in fixed assets (we are developing a new product and will launch mid 2017). I own 99% of the business. I also have about $90k of 1099 income from side jobs and consulting.
I'd like to use losses from my startup to offset my 1099 income. Is there anything in particular I should be aware of before I work on my accounting?
Submitted: 4 months ago.
Category: Finance
Expert:  Dr. Fiona Chen replied 4 months ago.

Dear Customer,

1) You did not loose your money. When we invest, we have to wait until the end to claim gain or loss. It is not a one year deal. You may be investing in the next Microsoft or Facebook with 75,000 and you are just waiting to see what will be coming up, especially when it is your own company. The end of your investment event will be when you sell or close your company. On your book, it is company's owner's equity. The company is still there, the equity account is still with the company. A company has a "life" of its own. It does not end or die. It forever exists.

2) Your 90,000 is your self-employment income and should be reported as the income of that year, i.e., 2016.

Regards,

Fiona

Fiona Chen, MPA, Ph.D., CPA, ABV, CFF, CITP, IMTA