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Lev, Tax Advisor
Category: Tax
Satisfied Customers: 29965
Experience:  Taxes, Immigration, Labor Relations
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I am self employed filing Schedule C, Sole-Propriertor, and

Customer Question

I am self employed filing Schedule C, Sole-Propriertor, and have been for over 10 years.
This is the 1st year that my taxes will not show a profit for 3 out of 5 years looking back from this year. Is this an automatic audit? Should I submit all my deductions and wait and see if the IRS comes back to me? I do wheelchair and scooter repair as a part time business for many medicare patients. I haven't been paid in 2015 for about $12,000 from one of the vendor's I do work for and this is why I am not showing a profit. I am on a cash basis - I believe I've read once you start on a cash basis you cannot change to accrual.
Submitted: 1 year ago.
Category: Tax
Customer: replied 1 year ago.
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Expert:  Lev replied 1 year ago.
That would definitely be a red flag - but not automatic audit.While it is possible that the IRS would audit you - we may not say if that will happen or not.You do NOT need to sent any supporting documents - just keep them for your record.Do not send anything to the IRS that is not required and that you were not specifically asked.
Expert:  Lev replied 1 year ago.
As you are a small business - it might be better to keep cash accounting method.Do not switch to accrual - that would be more complicated accounting.Just keep all your supporting documents - so if audited - you would be able to proof your intention to make a profit...I appreciate if you take a moment to rate the answer.Experts are ONLY credited when answers are rated positively.If you still have any doubts, need clarification - please be sure to ask.I am here to help you with all tax related issues.