Now that tax season is over, I want to discuss the hobby loss rules a bit. Is your small business really a business or is it a hobby (with the loss of any corresponding tax losses).
The IRS has addressed the issue with a list of factors they use to determine if a business is a hobby or not.
Here is the list from the IRS website:
Income & Expenses
Question: How do you distinguish between a business and a hobby?
So you should use this list to help determine if you really have a business or a hobby. This is not a final determination, just a starting point.
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