Schedule C expenses for 2015 but no income

[Jeter2016]

Client has $1980.00 of Schedule C expenses, however, he did not have any income for the year . This is the first year that he will be showing such a loss.
Can I take the loss without income or are the expenses capitalized for this year?

[Snaggletooth]

Take the Loss

I believe this happens sometimes, and it's OK as long as the business is still ongoing. I won't report such a loss for two years consecutively though. Here are a couple of scenarios where that could happen:

1) Interest paid during such a year on a business loan, especially if it is not mortgage interest which cannot be reported on Sch A.

2) Depreciation on equipment under the theory that depreciation is "recovery". (As in "Modified Accelerated Recovery System" - MACRS) This would be if the equipment was in fact being used with lack of revenue notwithstanding.

I believe the salient issue is whether the "business" is still in business with profitable intent. If the business is active in the prior year, and also active in the succeeding year, that is usually reasonable evidence.

If the expenses are such a nature that they CAN be capitalized, it might be good strategy to do so.

[Jeter2016]

Many thanks for your input. Your response makes sense. Many thanks