Income or Loss from Business Operations
Small Business Income and Losses
Revenue flowing into your business is income that usually must be reported. Income can take various forms:
- Income from operations, such as revenue from sales of goods and/or services.
- Capital gains from certain sales. Sometimes, these gains need not be reported immediately if the transaction is structured in a certain way (such as a like-kind exchange or an installment sale).
- Gains from sales of business property (other than inventory). These gains are called "Section 1231" gains (named after the section in the Internal Revenue Code that governs them) and usually receive capital gain tax treatment.
Business income can be offset by business losses. Like business income, a business may have different types of losses. These too can take various forms:
- Losses from operations, which result when deductible expenses exceed income
- Capital losses from sales of business assets
- Losses from the sale of Section 1231 assets
