"Doc" <docsavage20[at]xhotmail.comx> wrote:

- quote -

Sounds to me like you should file the Sch C just like you
did last year. Just because you brought in no gross income
doesn't mean you quit trying...ie, you do still have a
profit motive.

Mike Lewis, CPA

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The correct way is to report all your income ($0), the
product removed from inventory for personal use, and all
your expenses. This will show a loss on Schedule C. The IRS
allows you to have a loss as long as the expenses were
legitimate and you are operating in a business-like manner
(trying to make a profit). Since you plan to keep the
business, you should file the Sch. C with a small loss and
work to make a profit next year.

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You should not be afraid to take a business loss if you had
a legitimate loss -- that is perfectly acceptable. Luckily
the IRS is not your boss and you don't have to constantly
demonstrate gains...

Gary Brolis
http://www.MechanicsofMoney.com
http://www.MechanicsofMoney.com/blog.php

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Doc wrote:

- quote -

Not really. Nor is a $200 loss an audit selection item.

- quote -

Answer Yes. It's still a businesses by your description,
with nobody else running it; just a bit dormant in 2005.

Fred F.

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I have a home business - business license, etc. but due to
various issues - hurricane stuff, etc. just didn't do much
with it last year. Incurred a few relatively minor expenses
- ebay fees, web domain registration fee, business checking
account montly fees. Probably all amounts to less than $200.
Didn't bring in a dime of income. Ended up using my
"inventory" - CD's and cases, for personal use.

I assume I need to file a schedule C since I did the
previous year and need to show continuity.

What do I do about the "material participation" question?
Not sure, but I seem to fit the second test - I did all the
activity that was related to the business, even though it
wasn't much activity.

I'm going to be getting a refund regardless, but I don't
want to seem flaky having no income but deducting business
expenses. I do plan to step things up in the near future so
I don't want to discontinue the business.

What would be the most hassle-free way to deal with schedule
C?

Thanks for all input.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >