I always get sideways looks from people when I say this: turning a profit is not a bad thing. Yes, you’ll have to pay tax on that profit, and that stinks. And yes, of course you should deduct everything you possibly can. But when you show losses in a business venture, that means you spent more money than you brought in.
This post from 2011 is quite popular. It’s about a person in Minnesota who had a drag racing team which showed substantial losses each year. He took those losses as business deductions on his tax return, but the IRS and Tax Court said “no.” The moral is: if you say your “business” had $350 of […]
The hobby loss rules are important to know about, especially if you operate a side business.
The IRS has posted a video webinar for direct sellers to help determine if the seller meets the 9 tests under the Treasury Regulations for being in a trade or business. If you are wondering if you are a direct seller, here is what the IRS has to say: Direct sellers include any of the […]