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Financial Planning / Tax Strategies
|Subject: Re: when is a business no longer a business?||Date: 6/19/2012 10:45 PM|
|Author: nwvic||Number: 116295 of 122553|
Is the business incorporated, or in any form other than sole proprietorship? I think you would need to wind down that entity if you were to meet the requirements of being a "hobby" vs for-profit enterprise. At the very least, it would free you from the (possibly) required annual reports to the state.
No, it is (was) a sole proprietorship. There is no profit - not even close. He will never be able to use the NOL carryover, even if he qualified for it. In truth, he would be so far ahead to throw out his obsolete inventory, give away or fire sale the salable merchandise, and rent out the building. But he won't. His identity is wrapped up in being an entrepreneur. He thinks his clients - the few that are left - need him. I suspect they feel sorry for him. To me, it has become a hobby as there is no realistic expectation of a profit. But he is determined to keep going.
If I don't file for him, the state will make an estimate and assess - and attach or foreclose on his house - which I will likely inherit. But his lack of record-keeping makes it impossible for me to file an accurate return. The state is sending him their version of a POA, which he is supposed to sign appointing me to act for him. If he does, I'll try the hobby idea on them.
I swear I won't do this to my kids.
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