Re: Taxes and Tractors

Posted by Greg on March 06, 2002 at 21:57:12 from (4.61.201.133):

In Reply to: Taxes and Tractors posted by Alabama on March 06, 2002 at 09:34:32:

Here is an excerpt from the IRS web page, IRS.GOV.

Generally, a hobby is an activity that is carried on for personal pleasure or recreation. It is not an activity entered into with the intention of making a profit. In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:

You carry on the activity in a businesslike manner
The time and effort you put into the activity indicate you intend to make it profitable
You depend on income from the activity for your livelihood
Your losses are due to circumstances beyond your control (or are normal in the startup phase of your type of business)
You change your methods of operation in an attempt to improve profitability
You, or your advisors, have the knowledge needed to carry on the activity as a successful business
You were successful in making a profit in similar activities in the past
The activity makes a profit in some years, and how much profit it makes
You can expect to make a future profit from the appreciation of the assets used in the activity
The importance of knowing whether you are involved in an activity for profit or as a hobby is that the amount of expenses you can deduct if the activity is a hobby are limited to the amount of income from the same activity.

References:
Publication 535, Business Expenses

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