BUSINESS EXPENSES

[Gambers516]

MY CLIENTS BUSINESS HAS BEEN GENERATING INCOME FOR FOUR YEARS. HOWEVER, THIS YEAR THERE IS NO INCOME, ONLY EXOENSES. CAN I DEDUCT THOSE EXPENSES?

[IRonMaN]

Was he still in business?  What were the expenses for?  Why was there no income this year?

Why all of the shouting?  Everybody's hearing here seems to work fairly well so you really don't have to shout.

[Gambers516]

Yes, he is still in business. He sells a product he makes. he's made product, it just hasnt had sales this year. His expenses are for the depreciation of his equipment and costs of materials, as well as sho rent and utilities. PS: I will try to keep it down.

[IRonMaN]

If he is still trying to sell the stuff, he should be able to deduct some of the expenses.  But keep in mind that if some of those expenses are overhead they might need to be factored into inventory and not deducted until the products are sold.

[qbteachmt]

"and costs of materials"

Are you familiar with cost of materials vs cost of goods sold?

Materials that are part of product on hand or used to produce those goods for sale, that are not yet sold, are not Expense now. They are still there, invested in the product still on hand. That's the fine line you need to understand. Well, it's more of a bright line.