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taxmap/pubs/p334-036.htm#en_us_publink100025403

Chapter 9
Figuring Net Profit 
or Loss(p40)

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Figuring Net Profit or Loss

taxmap/pubs/p334-036.htm#TXMP093a163fIntroduction

After figuring your business income and expenses, you are ready to figure the net profit or net loss from your business. You do this by subtracting business expenses from business income. If your expenses are less than your income, the difference is net profit and becomes part of your income on page 1 of Form 1040. If your expenses are more than your income, the difference is a net loss. You usually can deduct it from gross income on page 1 of Form 1040. But in some situations your loss is limited. This chapter briefly explains two of those situations. Other situations that may limit your loss are explained in the Instructions for Schedule C, line G and line 32.
EIC
If you have more than one business, you must figure your net profit or loss for each business on a separate Schedule C.
taxmap/pubs/p334-036.htm#en_us_publink100025405

Net Operating Losses (NOLs)(p40)


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previous topic occurrence Net Operating Loss next topic occurrence

If your deductions for the year are more than your income for the year (line 41 of your Form 1040 is a negative number), you may have a net operating loss (NOL). You can use an NOL by deducting it from your income in another year or years.
Examples of typical losses that may produce an NOL include, but are not limited to, losses incurred from the following.
A loss from operating a business is the most common reason for an NOL.
For details about NOLs, see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts. It explains how to figure an NOL, when to use it, how to claim an NOL deduction, and how to figure an NOL carryover.