When the IRS classifies an activity as a hobby rather than a business, tax deductions can be limited or disallowed. To qualify as a business, the IRS looks for profit motive, customer activity, and profitability in at least 3 of the last 5 years. Proper structure and documentation are critical to avoid hobby classification. Click the link in my bio to access the Zero Income Tax Playbook.
0:55
When the IRS classifies an activity as a hobby rather than a business, tax deductions can be limited or disallowed. To qualify as a business, the IRS looks for profit motive, customer activity, and profitability in at least 3 of the last 5 years. Proper structure and documentation are critical to avoid hobby classification. Click the link in my bio to access the Zero Income Tax Playbook.
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