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Financial Planning / Tax Strategies
|Subject: when is a business no longer a business?||Date: 6/13/2012 5:55 PM|
|Author: nwvic||Number: 116261 of 121114|
My dad has run a small business for decades. He is now in his 80s and can't let go of it. Since mom died, ten years ago, his record keeping has disintegrated into shambles. He has not made a profit at it in at least that long. He is in California, and sells to other businesses, exclusively wholesale so there is never any sales tax due. As it is not profitable there is also no income tax due. His gross sales are under $10,000, probably much under, and most of his inventory is obsolete. He lives off his social security and pays most of it in interest on a large loan for the business property - where he stores the obsolete inventory and other junk. The state is after him again for failure to file and I have difficulty in finding enough info to prepare an accurate return.
While he thinks he can build the business back up to its former glory, there is no realistic expectation of a profit. At what point can I say this is a hobby and he is not required to file tax returns? It will hurt his feelings to call it a hobby, but it won't hurt mine to stop filing for him. I'm a bit too close to this one to see it objectively, and would appreciate your opinions.
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