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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
Hobby ventures report all
revenue on tax form 1040 as "Other Income". Expenses can be claimed up to
the amount of revenue reported and are recorded on Schedule A, Itemized
Deductions, under "Job Expenses and Certain Miscellaneous Deductions".