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Re: Taxes and Tractors
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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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