Business declaring loss, max # of years?

[Barwick11]

What is the name of your state? Michigan (but it's a Federal tax question)

My wife and I own and operate a business, and while it's profitable to us due to the tax deductions it allows, on our tax forms, due to mileage, etc, it shows a loss for 3 of the last 4 years, and will show one again for this year. However, the one year it did post a profit, it posted a friggin' HUGE profit compared to the losses it posted the other years. I haven't totalled them up, but I think the total profit for the one year MAY be bigger than the total losses from the other 3 years, and possibly even the one for this year.

Either way, I heard that a business isn't allowed to declare a loss for more than 3 out of 5 years. I heard somewhere else that a business needs to just declare a profit sometime in the first 5 years... either way, I need some straight answers, can someone help me? Otherwise am I going to have to throw out some of my receipts and mileage from this year, just to show a "profit" of like ten cents to please the IRS?

 

[clueless3]

Either way, I heard that a business isn't allowed to declare a loss for more than 3 out of 5 years. I heard somewhere else that a business needs to just declare a profit sometime in the first 5 years...

There are TONS of businesses out there that keep on posting a loss year after year after year. They are called... AIRLINES!! When was the LAST TIME that they showed a PROFIT???

If you haven't formed a corporation or an LLC, do so. When it comes to losses, the IRS looks on corps and LLCs with a kinder light than they do sole proprietorships.

 

[Barwick11]

I've thought about a LLC, but haven't done so yet. But either way, it's too late for this tax year.

 

[Barwick11]

Does anyone know the answer to this one?