S corp - no revenues

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  • thomtax
    Senior Member
    • Nov 2006
    • 1276

    #1

    S corp - no revenues

    Client started s corp business in 2005. It is website that offers various items for sale. He has done all the things that "expert" advice in the field have told him to do. He paid well to get website done professionally, bought keywords for search engines, adjusted his product line, etc.

    However, in 2006, he did not make one sale. It seems he is lost in the crowd and also may have followed advice from companies that were more interested in selling advice than in seeing their clients prosper.

    I would appreciate all thoughts and comments concerning this situation, with the exception of making fun of the client. He is already kicking himself enough.

    LT
    Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".
  • jainen
    Banned
    • Jul 2005
    • 2215

    #2
    no more

    >>with the exception of making fun of the client<<

    I'm in the mood for a new kind of challenge; I'll give this a try.

    My advice is two-headed. Or two-handed. On the one hand, divest yourself (a rhetorical device treating the 3rd party as "you") of the dream of instant Internet wealth. You have to build this business like any other, step-by-step. It takes time to develop a reputation. Go back through all the advice you have purchased. No doubt there are some gems in there, perhaps interesting ways to "seed" your customer base with special offers or discounts or even fake sales. Or something.

    On the other hand, after a year with NO results it may be crunch time. Crunch the numbers, that is. Can you even afford to keep this up, with no more guarantee of success than you had before? Are you like the gambling addict, throwing it all away on one more chance of having it all?

    Revise or make anew your business goals. This time, include some drop-dead limits -- so much more money, or time, and no more.

    Comment

    • thomtax
      Senior Member
      • Nov 2006
      • 1276

      #3
      Jainen

      What type of problems, with the IRS, can I expect in filing this return with no income and with expenses?

      Thanks in advance for your valued knowledge.

      LT
      Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

      Comment

      • jainen
        Banned
        • Jul 2005
        • 2215

        #4
        the truth

        >>What type of problems, with the IRS, can I expect<<

        Oh, the usual--they lose the return and claim they never got it, it's one of 45,000 that gets random, incorrect letters about something... or his old girlfriend rolls on him and tells them the truth.

        Comment

        • S T
          Senior Member
          • Jun 2005
          • 5053

          #5
          Maybe

          Maybe attach a note to the return explaining, I have done that with Schedule C returns, and claimed expenses which obviously produce a loss. So far so good!

          Sandy

          Comment

          • Joe Btfsplk
            Senior Member
            • Dec 2005
            • 527

            #6
            Deduct the loss and close the business

            He took the loss in a legitimate, although misplaced, belief that it could be profitable. There is no reason NOT to deduct it.
            However there is a very good reason to cut his loss and get out of the business.

            There are a lot of get-rich-quick schemes advertised on TV and elsewhere. It they worked, we would all be rich. As it is, only the promoters get rich.

            A good book title I saw once: "How I made $ 100 in Real Estate."

            Comment

            • thomtax
              Senior Member
              • Nov 2006
              • 1276

              #7
              Originally posted by Joe Btfsplk
              A good book title I saw once: "How I made $ 100 in Real Estate."
              Thanks to all for their comments.

              As to your comment on Real Estate, the one thing that I can tell you is this. Although the real estate agents will tell you about how they are not making any more land and that it will continue to go up, and they are probably correct, real estate is not liquid. Unless you are in an area that has a temporary shortage of housing, when you need the money is the time that land is probably not selling. You may have to wait months to get a sale and get all the paperwork completed. By then, hopefully the liquidity problem will have passed.

              LT
              Only in government or politics is a "cut in spending" really an increase. It's just not as much of an increase as they wanted it to be, therefore a "cut".

              Comment

              • jainen
                Banned
                • Jul 2005
                • 2215

                #8
                it will continue to go up

                >>they are not making any more land and that it will continue to go up<<

                Anybody who practices in a city knows that is simply not true. New real estate is developed all the time, and valuable properties can and do decline in value, sometimes becoming slums or abandoned buildings. On average, U.S. real estate has done little more than keep up with inflation over the last 50 years.

                Comment

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