I started a business two years ago but had to close it since it did not work out.?

Question

Two years ago, I started a consultation business but in 2006 I had to close it down since it did not work out.
I took a big loss, since I had spent a lot of money to start it and keep it going for two years.
Can I claim this loss in my 2006 tax returns?
Thanks

Answer 1

If the expenses were valid expenses, and claiming the expenses generated a loss for you in your business, of course you can claim a loss. Bear in mind that if you have a Schedule C business (a sole proprietorship) that generates a loss, the IRS may invoke the hobby loss rules on you if you generated losses in more than 2 years out of the previous 5. The hobby loss rules limits the deduction of expenses to the extent of your income. This means that you can fully offset your income from the business, but cannot claim more expenses than you have income (you cannot generate a net loss). There are also other factors that are considered when looking at whether the hobby loss rules apply, such as does the business require specialized knowledge, is this your only source of income, etc.

Answer 2

On a large investment loss you can claim up to 3K per year until you reach the total of the investment loss.

Answer 3

Oh yea... Schedule C is all for business income and or loss. You should get a good sized write off.

Answer 4

You can only claim losses against any gain.


good luck & bless

Answer 5

yes if not incorporated