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Posted by James Lewis on April 23, 2006, 2:02 am
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> I have a home business - business license, etc. but due to
> various issues - hurricane stuff, etc. just didn't do much
> with it last year. Incurred a few relatively minor expenses
> - ebay fees, web domain registration fee, business checking
> account montly fees. Probably all amounts to less than $200.
> Didn't bring in a dime of income. Ended up using my
> "inventory" - CD's and cases, for personal use.
>
> I assume I need to file a schedule C since I did the
> previous year and need to show continuity.
>
> What do I do about the "material participation" question?
> Not sure, but I seem to fit the second test - I did all the
> activity that was related to the business, even though it
> wasn't much activity.
>
> I'm going to be getting a refund regardless, but I don't
> want to seem flaky having no income but deducting business
> expenses. I do plan to step things up in the near future so
> I don't want to discontinue the business.
>
> What would be the most hassle-free way to deal with schedule
> C?
Sounds to me like you should file the Sch C just like you
did last year. Just because you brought in no gross income
doesn't mean you quit trying...ie, you do still have a
profit motive.
Mike Lewis, CPA
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