The rule is that a business should make a profit in three of any five years. That is not closely followed! When the IRS does look at a business that has lost money for some time they are looking at the efforts being made to conduct the business in a manner that would produce a profit. empirically they are less concerned about such a part time business when the individual is making a substantial taxable income and this "side" business is not used solely to cover that income.
Home-based Business. What if I have next to nothing coming in for how much I am deducting in taxes?
I am looking into setting up a home based Business as a part time thing. I have a day job and I would like to do this music endeavor on the side. I want this to be legitimate but I know I will be making very little money and writing off a lot in tax deductions. Does anyone have experience in with this type of scenario? Is there a reasonable expectation that IRS has around how much revenue needs to come in for how much you are writing off? I don’t want the Business to appear fraudulent although I have more to gain from a tax deduction basis.
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Anonymous
July 5, 2009
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