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" If your expenses outstrip the income, does anything need to be reported? If there is no net income, why depreciate?"

Good questions. I'll be interested in the expert answers to these.

But let me take a stab at it just to see if I'm right :)

I doubt you have to report a loss, but you would want to if you can offset it against other income.

I think you are required to depreciate in any case.
You can't "save" the depreciation for a future year.
And again, if you have other income, you can offset that against the loss of this business, including the depreciation.

How'd I do? ;)
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