Submitted By: someone
Answered: August 27, 2020 10:41 pm

How many years can a business lose money and still file a Schedule C?

A business that loses money year after year may draw the attention of the IRS; it may question whether this is a business with a profit motive or a mere hobby activity for which losses (expenses in excess of income) are not deductible. There’s no fixed limit on the number of years of losses. However, a business that’s just starting up can elect to rely on a presumption that the activity is for profit (not a hobby). If such business is profitable in three out of five years, it’s presumed to be for profit (a different presumption applies to horse-related activities). But even if the presumption isn’t met, facts and circumstances can be used to demonstrate a profit motive.

Tax Glossary

Roth IRA

A nondeductible contributory IRA that allows for tax-free accumulation of income. Qualifying distributions are completely tax free.

More terms