Tax info

[Robert Goodman]

[QUOTE=TXMike]

Originally Posted by insatty

I remember reading that you could only claim a loss for 3 years, after that they deem it not to be a business so you can no longer claim the loss

No, the 3 years in a row of losses is only a guideline, as is that of profits in 3 out of every 5 years. If you can show you had a reasonable expectation of a chance of profit, you can still get sched C deductions. It is understood that some businesses are more speculative than others. For instance, if you'd had declining losses for 3 years and thought you'd become profitable the next, so you invested a lot in equipment (under the limit for expensing, which is huge) but then got laid up and couldn't officiate that year, that's a legitimate loss.

Also, if they're the sort of business expenses that nobody would consider supporting a hobby, such as fees to a licensing agency, they're legit too. I've taken schedule C losses for many years on an invention, and maybe had a slight profit just one or two years, but IRS understands that things like patent maintenance fees and legal fees are not going into a hobby!

Robert