If your second business or third business is losing money, you know what pain is.
But don’t add to your troubles by losing the chance to claim an immediate tax deduction.
And that’s easy to do if you don’t show the IRS that you are “materially participating” in all your businesses.
We’ll tell you how to get all the deductions coming to you, and make the best of a bad situation, when you read my new article titled Tax Tips: Do Not Make This Mistake When Your Second Business Loses Money.
Three ways our fact-filled article can help you:
- We’ll explain the important concept of “material participation.” In order to qualify for an immediate tax deduction you have to materially participate in running all your businesses. To prove that you’re doing that, you have to pass one of seven IRS tests. We’ll tell you exactly what they are when you read the full article.
- We’ll help you steer clear of the passive-loss trap. If you can’t prove material participation in your businesses, the tax code makes your loss a “passive” loss. This can have serious negative consequences for you as we’ll explain when you read the full article.
- We’ll tell you why a time log can save your bacon. If you want to prove material participation to the IRS, a time log can be your best friend. You see, taxpayers without a daily time log consistently lose both to the IRS and in court. You’ll get all the details when you read the full article.