Question:
An old friend of mine has started a business this year. Can he decrease his tax liability by opening an IRA? r.

Answer:
Yes, if he had an income, but there are other qualifying factors which may be changed (retroactively) before he files his returns.  He may have other options, such as a Keough, or 401(k) plan - (consult a professional)!

Yes, the loss must be carried back 3 years, first, and then may be carried forward for 15 years.  In order to carry the loss forward, you must file a timely return & request the option - (consult a professional)!

None, based on factors such as will he have on deposit with IRS as much his prior years tax, will the amount owed be less than $500., or will at least 90% of this years liability have been held out at other sources (such a from another employer). If any of these conditions are met, no estimated tax is required, otherwise estimated tax could be required - (consult a professional)!

Hundreds, perhaps, but we really don't have a lot to bite into.  Do your friend a favor.  If there is a great deal of money involved, see a professional right away.  If it's just a simple return, and you feel you can do it on your own, get a copy of Schedule "C-EZ" or Schedule "C" and make a determination of what's involved - then, CONSULT A PROFESSIONAL!!!

Yes, if he is not covered under any employer pension plan.  If he is, he may be limited in deductibility.  This will not decrease his SE tax however.  And he may want to look at a SEP.

Yes, but that is an election and depends on AGI.  If he is eligible for a NOL, he has to carry back three years or make the election.  The answer to #1 is NO, if he has a loss and that is his only earned income.

Penalty of the underpaid tax.