Small business tax help website

Schedule C Help


Profit and loss calculation on Schedule C

The profit and loss calculation on Schedule C tax form is important. To calculate the profit and loss of the business on Schedule C, subtract the total expenses (line 28) from the gross income (line 7) to arrive at the tentative profit or loss. This amount is entered on line 29.

You may also deduct expenses for the portion of your home in which you do business on a regular basis. The home office deduction is dealt with in a later section of this chapter.

The net profit (loss) is entered on line 31 of Schedule C and on line 12 of Form 1040.


At Risk Rules


What is the At Risk Rule?

Line 32 of Schedule C deals with the At Risk Rules when the business shows a loss. Generally, these rules limit the amount of loss you can claim to the amount you could actually lose in the business. Check box 32a if you are personally responsible for all financial risks in the business.

Most sole proprietors are at risk.


What if I have a business that I am not at risk?

If you have a business loss and amounts invested in the business for which you are not at risk, you have to complete the Form 6198, At Risk Limitations, to figure your allowable loss. This amount is entered on line 31.