Welcome Guest. Register Now!  


For 2013 Tax Tips For Year 2013.


Reply
 
LinkBack Thread Tools Search this Thread Display Modes
  #1 (permalink)  
Old 04-02-2014, 10:59 PM
Junior Member
 
Join Date: Apr 2014
Posts: 1
Started a fishing business

My husband and I purchased a fishing vessel and limited entry permit in Alaska. We made repairs to the boat, and maintained it for the year 2013. We did not start actually catching fish until 2014. Can we file for 2013 and show a loss for our investment into the new fishing business?? We invested $150,000 total. Or do we have to wait until 2014 federal taxes are filed to deduct our expenses incurred in 2013?



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
  #2 (permalink)  
Old 04-15-2014, 06:01 AM
Moderator
 
Join Date: Oct 2010
Posts: 5,258
Quote:
Originally Posted by gretchy View Post


#1;My husband and I purchased a fishing vessel and limited entry permit in Alaska. We made repairs to the boat, and maintained it for the year 2013. We did not start actually catching fish until 2014. Can we file for 2013 and show a loss for our investment into the new fishing business??



#2;We invested $150,000 total. Or do we have to wait until 2014 federal taxes are filed to deduct our expenses incurred in 2013?
#1;I assume that as most other TPs you use cash method; any expense that is business related can be deducted on your Sch C. as you know, you can only deduct the expense against your profits. Since you haven't made a profit yet, then you cannot "deduct" it. You can, however, report it on your Sch C and it will end up being reported as a Net Operating Loss. If you have other income, that loss can be applied against your other income in your overall taxes on your 1040. So, once you start your business in future tax years and you start turning a profit, you can carry forward and deduct the biz related losses against the profit.

#2;as mentioned above; if the amount on your 1040 line 41 is a negative number, use Form 1045 to determine the allowable NOL. You may apply an NOL to past tax years by filing an application for refund or amended return for those years. This is called carrying a loss back. As a general rule, it’s advisable to carry a loss back, so you can get a quick refund from the IRS on your prior years’ taxes. However, it may not be a good idea if you paid no income tax in prior years, or if you expect your income to rise substantially in future years and you want to use your NOL in the future when you’ll be subject to a higher tax rate. Ordinarily, you may carry back an NOL for the two years before the year you incurred the loss. The NOL is used to offset the taxable income for the earliest year first, and then applied to the next year or years. This will reduce the tax you had to pay for those years and result in a tax refund. Any part of your NOL left after using it for the carry-back years is carried forward for use for future years. There are two ways to claim a refund for prior years’ taxes: You can file IRS Form 1040-X within three years, or you can seek a quicker refund by filing IRS Form 1045. If you file Form 1045, the IRS is required to send your refund within 90 days. However, you must file Form 1045 within one year after the end of the year in which the NOL arose. You have the option of applying your NOL only to future tax years. This is called carrying a loss forward. You can carry the NOL forward for up to 20 years and use it to reduce your taxable income in the future. When you do this, you must attach a statement that includes a computation showing how you figured the NOL deduction. If you deduct more than one NOL in the same year, your statement must cover each of them.



Digg this Post!Add Post to del.icio.usBookmark Post in TechnoratiFurl this Post!Reddit! stumble!bookmark in google!Share on Facebook!
Reply With Quote
Ads
Reply



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

vB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Foreigner started a C-Corp in California, with no Profit Distribution/Salary. Does he need to File Personal Tax Return with IRS and State? cyrix C-Corporation 11 01-21-2014 11:28 PM
Started an S Corp in May 2012 - Start up expenses Rd1200 S-Corporation 2 01-24-2013 11:52 AM
New job started last year with only expenses - no income johnlamon Itemized Deductions 1 01-12-2011 10:37 PM
Started out a small business Please help! seek4help Sole-Proprietorship 6 03-13-2009 12:10 AM
just started, 5 partners charvey S-Corporation 2 06-08-2007 03:42 PM

Follow us on Facebook Follow us on Twitter Google Buzz Rss Feeds

» Categories
 
Individual
 » Income
 » IRA/Sep
 » Medical
 
Corporations
 » Payroll
 
Forum for CPAs
 
Financial Planning
 
 
 

» Recent Tax Q&A
No Threads to Display.