Tax Experts

Claiming a Loss on Schedule C

By Kevin McCormally, Editorial Director, Kiplinger.com

March 20, 2008

Q: My question concerns showing a loss on a Schedule C for my small music business. I have estimated a loss this year due to subcontract work for private music lessons.

My last check was supposed to be cut from the contractor in December 2007 but was not cut until mid January 2008. The tax statement from the contractor for 2007 does not include his last check either. I originally planned on claiming that extra payment in 2007, but since I did not receive payment until 2008, I am showing a loss of $3000 for 2007. What should I do? -- J. Angelo

Kevin's Answer:

I think you'll find section 9. Figuring Net Profit or Loss of IRS Publication 334 helpful as well as Publication 536.

Bottom line, since you are probably a cash basis taxpayer, the check you received in January is treated as 2008 income. You can't claim it as 2007 income to offset your loss. If you have other income for 2007, the loss can offset that.

FIND MORE TAX ANSWERS

• Print
• Comments
• Email
• RSS