IRS and Taxes

[Bodley]

When I started selling, I set up my side-business as a sole proprietorship business, purchased business licenses, remitted sales taxes and treated it like a business via the IRS.

During 2008, due to my full-time job, I did not take any more paying jobs in the photography business. I did pay my business licenses and personal property taxes (required to operate a sole proprietorship in my state). My business income from residual sales was a whopping $40. My cost and depreciation was around $1,900.

Since I really didn't "Operate" the business, I don't think I should count it on my taxes. It's clearly a loss. So my questions:


legally can I not count it for 2008?
Since I've counted it in the past will it be a red flag to the IRS if I don't this year?
Will there be a problem if I don't count 2008 and start it up again in 2009.

[catspaw]

I'd say this is most definitely a question for a tax advisor -- more so because when the IRS comes knocking you'll need *solid* reasoning to explain why you did or did not do what you did. 'Advice' from an online forum isn't going to hold up to anything.

[Bodley]

I'd say this is most definitely a question for a tax advisor --

Agreed - If I were hiding income I would worry more.

Thanks for the reply

[ChatKat]

If you intended to make a profit and run a business, then you would continue to file your Schedule C. You can take a loss for three of five years. These are legitimate expenses. You might not want to do that or need to. The bottom line is your intention to have made a profit.

Your own tax advisor would be the one to help you determine what you should do. Every business person needs one. You wouldn't pull your own tooth, you'd go to the dentist. Most people don't service their own cars even if they know how. Tax advice isn't one size fits all. It's specific to your own situation and your tax professional can often save you more than the cost of the consultation.

(yes, I am a tax professional)