Hobby or Business?

Blogger
Share this content
0

Most tax preparers have encountered the client who can't quite distinguish that fine line between a hobby and business. It's up to the tax professional to explain the rules and, in many cases, help the client position what could be called a hobby so it can be considered a bona fide business activity in the eyes of the IRS. Ken Berry's article about a recent Tax Court case in which a documentary filmmaker with a day job as an attorney faced off with the IRS on the hobby loss rules.

The standard hobby loss rule requiring a profit in three out of five years is an excellent starting point for distinguishing a business from a hobby. But there's much more going on behind the scenes when the IRS makes a determination about the real nature of a business venture. Check out the nine factors that will help you and your clients decide how expenses should be classified.

Replies

Please login or register to join the discussion.

There are currently no replies, be the first to post a reply.