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  #1  
Old 02-05-2005, 08:46 PM
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Join Date: Feb 2005
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Home based business (profit/loss)

What is the name of your state?What is the name of your state? California

I've had a home based business for going on 5 years now. I've had a CPA doing my taxes for the past 4 years (since I opened my business). Three of those years, she claimed a LOSS....while only one year a PROFIT. I want to do my own taxes this year so my question is:

Is it TRUE that a business must show a profit 3 years out of 5 years? If so, how was my CPA able to get away with showing 3 years loss?

Thanks for any help!
  #2  
Old 02-05-2005, 11:36 PM
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Join Date: Aug 2003
Posts: 1,848
Quote:
Originally Posted by Mare52
What is the name of your state?What is the name of your state? California

I've had a home based business for going on 5 years now. I've had a CPA doing my taxes for the past 4 years (since I opened my business). Three of those years, she claimed a LOSS....while only one year a PROFIT. I want to do my own taxes this year so my question is:

Is it TRUE that a business must show a profit 3 years out of 5 years? If so, how was my CPA able to get away with showing 3 years loss?

Thanks for any help!
It isn't carved in stone. In order to prove profit motive, the IRS uses the guideline of 3 out of 5 year profit. Your CPA isn't getting away with anything, and if the return is done correctly, the CPA isn't liable for how the bottom line turns out. That is your responsibility.

Snipes
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This post does not create an agreement to represent you before the IRS, nor does it invoke confidentiality regulations. Postings are based only on the information provided and you should consult a tax professional in your area before relying on information contained in this post.
  #3  
Old 02-08-2005, 10:10 AM
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Join Date: Feb 2005
Posts: 4
Exclamation
California.

For the past two years, I have found errors on my tax return that my CPA made. I would have to call her to have her re-do the tax return. So it is without doubt that I am concerned with this CPA's abilities. When this happens two years in a row...two different errors...I get worried!

With the info I've given above and in doing the taxes myself, I need to know:

What is the legal amount of gross profit a home based business must make in order to deem it necessary to file a Schedule C?

Thank you.
  #4  
Old 02-08-2005, 10:23 PM
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Join Date: Aug 2003
Posts: 1,848
It isn't gross profit, it's gross receipts.

That amount would be $400.

If your CPA made that many mistakes, cut your losses, get your money back, and hire an EA instead.

Snipes
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This post does not create an agreement to represent you before the IRS, nor does it invoke confidentiality regulations. Postings are based only on the information provided and you should consult a tax professional in your area before relying on information contained in this post.
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