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How to tell a business from hobby.

December 30, 2011

Factors to consider when deciding if a client’s activity is geared to making profit:

  1. The manner in which the activity is carried on
  2. The expertise of the person (or advisers)
  3. The time/effort put into the activity
  4. An expectation that assets used may appreciate in value
  5. Success in similar/dissimilar activities
  6. History of profit/loss in the activity
  7. The amount of occasional profits
  8. The person’s financial status
  9. Any elements of personal pleasure or recreation.

From → Audit Defense, IRS, Tips

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