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Comments on this
website are informational in nature and are not intended to
be interpreted as
specific tax advice. The comments cannot be used to avoid
taxes under the Internal Revenue Code or the regulations of other tax
authorities. Furthermore, this website is not intended, and should not be interpreted, to support
the promotion or marketing of any tax avoidance schemes.
Date last modified:
12/21/18
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The IRS offers guidance regarding whether an activity
is a hobby or a true business endeavor. Tax-wise they are treated
differently. An entrepreneur should consider the following questions:
-
Do I intend to make a profit?
-
Am I operating in a business-like manner (advertising,
office space, licensing, etc.)?
-
Have I changed or modified the methods of operation to improve profitability?
-
Do I have the knowledge, or access to
knowledge, necessary to operate the activity as a successful business?
-
Has the activity made a profit in the past? Have
I made a profit from other, similar activities in which I have been involved?
-
Do I depend on income from the
activity?
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