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Subject:  Re: Sole Proprietorship:Taking a Year Off Date:  7/12/2002  6:27 PM
Author:  TMFTaxes Number:  60918 of 127745

<<I have a small business that has been filing a Schedule C for about 10 years, usually showing a profit on Schedule C (and therefore having tax due).>>

Congrats on your success.

<<I was thinking of taking a (tax) year off, but the business will continue to have expenses (depreciation, rent, etc.).>>

You've got to tell me a little bit more about what you mean when you say "take a year off". Do you mean just leave the business? Continue to pay rent, insurance, utilities, wages, whatever...but not "work" the business?

<<Can I use these expenses on Schedule C in the year I take off to create a loss on Schedule C? Or do I carry them forward? Or do I just lose them?>>

Tell me a little bit more about what you mean by "taking a year off" and I'll take a stab. It'll take a bit of research...I've never heard of such a thing. So I'll have to look some stuff up.

But my GUT response is that the year that you "take off", you would have NO profit motive...and if you have no profit motive, you have no business. And if you have no business, you have no business losses. So if somebody was holding a gun to my head, I'd say that those expenses would be non-deductible in the year in question. Would those deductions simply be "lost" or could they be capitalized or otherwise suspended and used at a later date? Another great question.

So give me a little more info and I'll do the best that I can.

TMF Taxes

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