Tax question about Sch C & dependant

[ldreyna]

I have a couple of situations that I have not had or read about.

1. Tp claims he started an independant contract business in Dec. 2010 as a satellite installer for Direct TV. He is still in training by the co. So he had NO income since hired by co. Yet, he has expenses for the tools he bought. My question is --Is Sch C for this transactions (no income & $1600 expenses) that give him a net loss acceptable?

2. Tp's father lived with him in 2008. Parent died in May 31, 2008. So before parent died he was a dependent from Jan. to May 31, 2008. My question is, would parent qualify for the dependency exemption that year? Tp didn't claim his parent because HRB (his preparer) told him his parent didnt qualify because he lived witb him for 5 months. Tp says (after) that a tax adviser said the parent DID qulify to be a dependent because his death during the year is like parent lived for the whole year with tp.

I know this rule applies to newborns, but does it apply in this situation?

Any feedback would be appriciated.

Thanks,

Larry

[Pacun]

I am going to start using this phrase more fequently... it seems to be a straight forward situation on both cases.

1.- He has not started his business yet, so no deduction for 2010. Next year you will have startup and (maybe) organizational costs.

2.- Same rule applies when someone dies or is born in the tax year. He can claim father and qualify as HH if he provided more than 50% of father support for those 5 months father was alive. If he doesn't qualify for HH,he can claim him if he provided more than 10% of his support and others that provided more than 10% of support sign that they will not claim the father.

[ldreyna]

Thanks