I understand there are options for carrying forward and back the loss (Pub 536), but would appreciate a quick "simple" summary, specifically if any of the loss can be deducted from other income in the same year (like a capital loss limted to 3K income deduction per year). Is this allowed, or can the loss only be deducted against other schedule C income in past or future years?
In my specific case the loss (this year) will be an artifact of cash accounting and the fact that I was paid last year for work (and expenses) that occured this year (where I expect zero revenue).
Note that as followup question related to the case for choosing to apply the loss to last year (which may be recommended as the best thing to do to get he money the fastest), how do retirement contributions such as a SE 401K effect this?
Say for example, in 2007 you have a 10K gross profit, but contributed almost all of it (minus payroll tax effect) to a SE-401K, so basically you paid no federal income tax on it. Unless they left a nice loop-hole, I would expect that the IRS would not let you get a refund/deduction in 2008 based on the 2007 business income if you did not pay any taxes on it. Similary if you carry the loss forward to 2009, will the loss reduce the gross profit used to compute the maximum SE-401K contribution in
2009?