A rule established by the Internal Revenue Code for determining whether a taxpayer is engaged in a legitimate business activity for purposes of generating a profit. Activities that don't generate a profit in at least three of five tax years, or are not expected to produce profits in future years may be deemed as a hobby and, therefore, ineligible for certain business tax deductions. The rule does allow for certain hobby expenses to be included in personal itemized deductions.
Related information about hobby loss rule:
- Is Your Hobby a For-Profit Endeavor?
Aug 3, 2012 ... IRC 183 is sometimes referred to as the “hobby loss rule.” Taxpayers may need a clearer understanding of what constitutes an activity engaged ...
- Internal Revenue Code section 183 - Wikipedia, the free encyclopedia
The hobby loss rule breaks down into four requirements: not engaged in for profit, deductions otherwise allowable, sections 162 and 212 would have applied, ...
- Beware of the Hobby Loss Rule - The Small Business Advocate
Feb 25, 2009 ... As you startup your small business as a sideline in this tough economy, be aware of the IRS rules on the so-called hobby loss. Tax expert ...
- Hobby Loss Definition | Investopedia
The "hobby loss rule" states that if an activity is profitable in three years out of five then it can be treated as a business in the one or two year(s) that a loss was ...
- Incorporating Your Business to Protect Business Losses
How to Fight the Hobby-Loss Rule. By William Perez, About.com Guide. See More About: hobby loss rule · business tax planning. If the net profit figure on your ...
- Freelance Tax Tips: Protecting Your Business Losses
How to protect your Schedule C business losses. Overview of the hobby-loss rule of thumb, and tips for proving your profit motive in an IRS audit.
- Hobby Loss Deductions
The so called “hobby loss rule” is a win-win break for taxpayers. It came about because the law requires taxpayers to have a profit motive in order to deduct ...
- Defending the “hobby loss” Rule with a Business Plan - Sanjiv ...
Nov 10, 2012 ... A business plan is very important where a business is concerned. As long as you have a business idea, you need to draft a business plan so ...