Major life milestones often have a major tax impact. Changes in your marital status, having a baby or adopting a child can have significant impact on your taxes. This is the place to ask questions about dependents, real estate, and other various scenarios that play a significant role in what taxes you pay.
02-26-2018 08:59 PM
My husband has been a self employed artist for the last 10 years. This year (2018) he has decided to expand his business to include managing other artists and providing recording studio space. On our 2017 taxes do we claim that we are closing his business so that on our 2018 taxes his business change will be treated as a new business?
03-12-2018 11:16 AM
There is more involved in closing your business than just stating on the return that you close the business and start a new one. Generally, if you are self-employed and still continue doing business in the same line of work through 2018, you should not claim that you close the business in 2017 and start new business in 2018.
You would only state on return that you closed the business if you actually closed it in 2017 and start new line of business in 2018 with new name/ new address/ new bank accounts/ tax numbers…etc.
If you state that you close business and start new one in the same year, you would have to prepare two schedule Cs for two businesses. You will have to report sale/disposition of business properties or business assets on the date you choose to close old business. And if you use same equipment/ supplies/ business assets carried from old business, you would have to allocate and report the basis of equipment/ properties used for new business.
You might consider meeting with a tax professional who can assist you with this and answer any other questions that you may have regarding closure of business and starting new business.
Hope this help you out.
Tax Research Specialist.
The Tax Institute at H&R Block.