I am not sure I understand your question. Are you asking if you can write off your business losses on your taxes and possibly get a tax refund? If so, the answer is maybe. It will depend on how your business is organized. If you are a sole proprietorship or a single-person LLC, you would file a schedule C with your personal taxes. The schedule C will contain your income and your expenses. If you show a business loss, you can carry that over to your personal form 1040 and it may result in you getting a refund. If your business is organized as a corporation, then you would file corporate taxes, which are not connected to your personal taxes. One thing to remember is that the IRS expects a business to make a profit in three out of five years. If you don't, then the IRS can audit you to determine whether you have created a tax shelter as a way to avoid paying taxes or they can declare your business to be a hobby and you will be able to write off expenses only equal to the amount of profit you made. You won't be able to show negative income.

Just make sure your business intent is well documented. In a recent case, a cattle farmer lost money for 24 years and still proved a profit motive.

'The IRS does not expect your business to make a profit for 3 out of 5 years. To be in business you must have the intention to make a profit.' interesting differnce of opinion my accountant went with the 3 out of 5 test...I hope you are right Message Edited by NicoleD on 12-24-2009 05:38 PM

Losses from a business may be tax deductible against your persional income tax, but that's about it as far as I know.

According to the IRS: If your deductions are more than your income for the year, you may have a “net operating loss.” You can use a net operating loss to lower your taxes in other years. See Publication 536 for more information.

The IRS does not expect your business to make a profit for 3 out of 5 years. To be in business you must have the intention to make a profit.

Thanks for the input BizResearcher! jcjr33 - can you provide some additional information about your situation so we can be sure you're getting the answers you're looking for? Message Edited by JamieD on 11-09-2009 11:43 AM

Thanks for the input BizResearcher! jcjr33 - can you provide some additional information about your situation so we can be sure you're getting the answers you're looking for? Message Edited by JamieD on 11-09-2009 11:43 AM

I am not sure I understand your question. Are you asking if you can write off your business losses on your taxes and possibly get a tax refund? If so, the answer is maybe. It will depend on how your business is organized. If you are a sole proprietorship or a single-person LLC, you would file a schedule C with your personal taxes. The schedule C will contain your income and your expenses. If you show a business loss, you can carry that over to your personal form 1040 and it may result in you getting a refund. If your business is organized as a corporation, then you would file corporate taxes, which are not connected to your personal taxes. One thing to remember is that the IRS expects a business to make a profit in three out of five years. If you don't, then the IRS can audit you to determine whether you have created a tax shelter as a way to avoid paying taxes or they can declare your business to be a hobby and you will be able to write off expenses only equal to the amount of profit you made. You won't be able to show negative income.