How & where to declare equipment sale income

crosley

I have been working for the past 10 years on a leased building to open a restaurant that never did open. I have spent about 75K of which about 35K was for equipment and 20K for rent, & 20K for renovations. Due to health issues, I sold all the equipment last August for 20K I'm sure I need to claim this as some type of income but do not know how or where to declare this since it was never any type of business. I have receipts for what I spent on it to deduct.

Henry

Hi crosley,

I'm so sorry to hear about the challenges you've been facing and hope I can help clarify things. According to IRS Publication 535, if your attempt to go into business is unsuccessful, the expenses you accrued while trying to establish it fall into two categories:

1. The personal costs you had before deciding to start or buy a specific business, such as preliminary investigation costs. These cannot be deducted.
2. The costs you had while attempting to start or buy a business. These can be deducted as a capital loss.

To report a capital loss in the software, select Income > Common Income > Stocks or Investments Sold (1099-B) from the menu bar.

If your capital losses end up being more than your capital gains for the year, you can generally only claim up to $3,000 of the excess loss each year. Any remaining amount over the $3,000 limit can be carried forward to later years.