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Can I use my business solely for writeoffs

Posted on 4/7/24 at 5:10 pm
Posted by dbbuilder79
Overton NV
Member since Dec 2010
4151 posts
Posted on 4/7/24 at 5:10 pm
Board Accountants, I had/have an LLC business license in construction that I no longer use because I started working for another company. I've kept the business just in case I decided to start working for myself again, which at the moment seems very likely.

Last year, I spent over $12,000 in fuel and $8,400 in truck payments alone that will not be reimbursed. There are also about $3,000 in tools and around $6,000 in other expenses that I could normally write off.

Google says I can no longer claim fuel/vehicle costs as a write off on my personal taxes.

Is there any way to slide this over to my personal tax return?
Posted by Penn
Jax Beach
Member since Jan 2008
23448 posts
Posted on 4/7/24 at 5:53 pm to
Similarish situation this year

My accountant advised against
Posted by dbbuilder79
Overton NV
Member since Dec 2010
4151 posts
Posted on 4/7/24 at 5:59 pm to
Because of possible audits? Or another reason?
Posted by Hou_Lawyer
Houston, TX
Member since Jun 2019
1869 posts
Posted on 4/7/24 at 6:28 pm to
Yes is the short answer

Make a new LLC the December before the next year and do it all over again
Posted by Ann Arbor Tiger
Land of "GO BLUE"
Member since Jan 2004
184 posts
Posted on 4/7/24 at 7:00 pm to
You have to show a business profit 1 year in 3 to be able to not have the IRS classify your business as a hobby and deny the losses/writeoffs.
Posted by Penn
Jax Beach
Member since Jan 2008
23448 posts
Posted on 4/7/24 at 7:07 pm to
Audits possibility
Posted by dbbuilder79
Overton NV
Member since Dec 2010
4151 posts
Posted on 4/7/24 at 7:14 pm to
quote:

Make a new LLC


I thought about proposing this to my boss. Make me a 1099 employee. He'd probably take away my health insurance, tho.

I guess my question should be: is that the only way I can write off any and all of my noncompensated expenditures?
Posted by lsu for the win
Member since Jun 2022
814 posts
Posted on 4/7/24 at 7:48 pm to
No. You have to operate a business for the purpose of making a profit. You cannot claim expenses with zero income. They will claim it’s a hobby and disallow if or when you get audited.
Posted by lsu for the win
Member since Jun 2022
814 posts
Posted on 4/7/24 at 7:50 pm to
Ridiculous post. I hope you will represent him in tax court.

If anything you could try to roll up some initial “start up” expenses but even those should be capitalized and not immediately expensed.
Posted by ApexHunterNetcode
Member since Aug 2023
261 posts
Posted on 4/7/24 at 8:34 pm to
quote:

1099 employee. He'd probably take away my health insurance, tho


A part of the definition of a 1099 employee
Posted by turkish
Member since Aug 2016
1750 posts
Posted on 4/7/24 at 8:36 pm to
Do you think others should pay your tax bill?

Under what circumstances should you have to pay others’ taxes?
Posted by LSUFanHouston
NOLA
Member since Jul 2009
37093 posts
Posted on 4/7/24 at 10:15 pm to
In order to deduct expenses, you have to try to turn a proift. Step 1 is to actually have or try to have revenue, which you do not and are not trying to do so.

You MIGHT be abel to let it slide for a year or so. After the second year, and absolutely after the third year of showing no revenue and all those expenses, there is a high chance you are going to get audited.

And then the IRS is going to be pissed, because what you are doing is pretty much tax evasion.

That's when they transfer your case from IRS audit to IRS Criminal Investigation.

So your options are:

1) get reimbursed, then the company can at least take the expense

2) Move to 1099, but if this company is your only client, you have a whole another set of issues

3) Wait until 2026, when 2% employee deductions come back on the books (assuming they don't change that).
Posted by BabyTac
Austin, TX
Member since Jun 2008
12135 posts
Posted on 4/8/24 at 5:07 am to
quote:

$12,000 in fuel and $8,400 in truck payments


The rest of the country doesn’t want to pay for you to drive around in that lifted F250 you don’t need.
Posted by makersmark1
earth
Member since Oct 2011
15829 posts
Posted on 4/8/24 at 6:25 am to
quote:

had/have an LLC business license in construction that I no longer use


I would imagine this is not allowed.

You have to have a “business” in the functional sense to take “business” expenses/deductions.
Posted by makersmark1
earth
Member since Oct 2011
15829 posts
Posted on 4/8/24 at 6:28 am to
quote:

Because of possible audits? Or another reason?


Should everyone just declare their self a “sole proprietor” business and expense everything to pay no taxes?

I think I will pass.
Posted by SlowFlowPro
Simple Solutions to Complex Probs
Member since Jan 2004
422465 posts
Posted on 4/8/24 at 6:53 am to
quote:

Yes is the short answer

I remember once some rando told me my life would be over and I'd have to explain myself in front of a jury because I told a poster he should consult with attorneys but he should be fully capable of doing an uncomplicated succession himself....you better watch out b/c he's comin.
Posted by baldona
Florida
Member since Feb 2016
20447 posts
Posted on 4/8/24 at 12:48 pm to
quote:


Board Accountants, I had/have an LLC business license in construction that I no longer use because I started working for another company. I've kept the business just in case I decided to start working for myself again, which at the moment seems very likely.

Last year, I spent over $12,000 in fuel and $8,400 in truck payments alone that will not be reimbursed. There are also about $3,000 in tools and around $6,000 in other expenses that I could normally write off.


When you work for yourself, you pay for that yourself.

When you work for someone else, the business you work for pays for it.

That's part of your employment package. If you are driving a ton for work then thats between yourself and your employer, that's not between you and the IRS.

ETA: A write off is a terrible term anyway. A write off is a business expense. If you have no business, how can you have an expense? Your business can lose money or it can break even. But if you aren't attempting to make money, the IRS will not allow you to continually just lose money.
This post was edited on 4/8/24 at 12:51 pm
Posted by thunderbird1100
GSU Eagles fan
Member since Oct 2007
68321 posts
Posted on 4/8/24 at 1:21 pm to
quote:

Last year, I spent over $12,000 in fuel


I'd first suggest getting rid of this fuel hog and getting something way more efficient if you're driving this much. At minimum, go out and aget a $5k efficient beater to commute around in if you're dying to keep the gas guzzler and only use that when you absolutely need to.

$1k/mo in fuel for 1 vehicle is absolutely insane, especially if its not for business purposes

You could probably get that down to $4000-$6000/yr in fuel costs just by getting some much better to make the commute in.
This post was edited on 4/8/24 at 1:26 pm
Posted by LChama
Member since May 2020
1651 posts
Posted on 4/8/24 at 3:12 pm to
How much of a profit does the gov want one to show?
This post was edited on 4/8/24 at 8:20 pm
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