I have a home business - business license, etc. but due to various issues - hurricane stuff, etc. just didn't do much with it last year. Incurred a few relatively minor expenses
- ebay fees, web domain registration fee, business checking account montly fees. Probably all amounts to less than $200. Didn't bring in a dime of income. Ended up using my "inventory" - CD's and cases, for personal use. I assume I need to file a schedule C since I did the previous year and need to show continuity. What do I do about the "material participation" question? Not sure, but I seem to fit the second test - I did all the activity that was related to the business, even though it wasn't much activity. I'm going to be getting a refund regardless, but I don't want to seem flaky having no income but deducting business expenses. I do plan to step things up in the near future so I don't want to discontinue the business. What would be the most hassle-free way to deal with schedule C? Thanks for all input.