Discussion:Schedule C Losses
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Discussion Forum Index --> Tax Questions --> Schedule C Losses
Zimmermancpa (talk|edits) said: | 21 March 2008 |
| Is a taxpayer required to file a Schedule C if the business for profit shows a loss? I have a client who would qualify for the EIC if it weren't for a Schedule C loss offsetting all her W-2 wages. | |
Michaelstar (talk|edits) said: | 21 March 2008 |
| The t/p is required to file the Schedule C if there are receipts for the business. The t/p is not required to deduct all of the expenses and show a loss. The Schedule C can have a net income of zero. | |
RoyDaleOne (talk|edits) said: | 21 March 2008 |
| I would disagree in that if an allowable deduction would change a tax benefit, mostly the taxpayer would be required to take such a deduction.
Could the Schedule C be classified as a "hobby"? Could you elect to capitalize some of the deductions? Do the required receipts and records exist for all of the deductions, i.e. car expenses? Some of my thoughts. | |
Zimmermancpa (talk|edits) said: | 21 March 2008 |
| The Schedule C can not be a hobby and none of the expenses could be capiatlized; it was her final year of business as well. | |
PostingFromWork (talk|edits) said: | 21 March 2008 |
| Michaelstar, you are dead wrong about that.
§32(e)(2) provides that net SE earnings for the EIC, is defined by §1402(a). The relevent part of §1402(a) reads: " The term "net earnings from self-employment" means the gross income derived by an individual from any trade or business carried on by such individual, less the deductions allowed by this subtitle which are attributable to such trade or business..." As you see, there is no choice in the matter other then those provided by election, i.e. §179, startup costs, etc. | |
Michaelstar (talk|edits) said: | 21 March 2008 |
| Actually Posting From Work the site is sec 32(c)(2) and not (e). While you are right in theory, your method of delivery needs some work. I tend to stay away from EIC returns so I stand corrected. I also tend to stay away from others who's personality skills such as yours need some work. You might want to think about toning it down a little next time.
My Mom always told me - you can attract more bees with honey than you can with vinegar. | |
| 21 March 2008 | |
| We have had some very interesting and illuminating discussions about this in the past. I suggest that you try and search for them. | |
| 21 March 2008 | |
| Let's say, for the sake of argument, that the sch c individual uses their car for the business and maybe even extensively. Let's say by deducting the mileage, the scenario hurts the client. Now, if said client has no documentation for the mileage, then we would leave it off.
I'm sorry, I would have to see where it said specifically every possible, everything you could think of deduction absolutely has to be taken. The writing above does not say you HAVE to take every deduction. I read it as saying you are only allowed allowable deductions. Fix the loophole and I won't do it. I haven't researched and don't have time to research, but are there actual cases where deductions got added in to eliminate a tp claim to EIC? | |
| March 21, 2008 | |
| I think fraud is fraud, Fred. I don't mean to slam anyone, but there's more at stake than the EIC. Tax returns are used to qualify for mortgages, buy cars, determine child support, compute retirement contributions, on and on. To knowingly leave off deductions in order to overstate income....I can't imagine that I'd want any part of that. You don't either, maybe you just never thought of it. | |
| 22 March 2008 | |
| Fsteincpa hit it partially right, it boils down to documentation for all deductions, not just mileage. If you don't have documentation you can't take it. Sometimes I feel there are several people who troll these forums and their answers are so conservative they seem to be IRS agents. | |
