Question by cakcynthia: which is better for small business taxes…profit or loss?
some people say show a loss. we have a lawncare business and have a lot of deductions. We will still show a profit again this year.(2yr old business) A couple of business owners tell me to use more deductions and show a loss. We have two small children, so wouldnt it be better to show more of a profit for the tax credits. I dont get it. Would we be better. I dont want to mess them up. I am using turbo tax.
Answer by Richard K
When completing your business return to Schedule C should acurately portray the result of your business. It should include all revenue and all actual costs of conducting the business. The result of this honest calculation is then added (profit) or deducted (loss) from your other income to compute your income tax.
Is is considered fraudulent by the IRS to manipulate your business results positively or negatively in order to achieve a lower tax liability.
This advice is based upon our understanding of the law in effect at the time it was written as it applies to the facts provided by you. See my profile for more information.
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