Whats the difference between a hobby and a business?
sinin1
Posts: 7,500 ✭
If you collect coins and do not plan on burying them with you, you will sell some along the way
what's the difference between a hobby and a business?
and aren't all collecting hobbys with money/assets involved actually businesses (even though many have little chance of making money, some collecting hobbies can) ?
this is a question I have after reading the 1099's threads replies
what's the difference between a hobby and a business?
and aren't all collecting hobbys with money/assets involved actually businesses (even though many have little chance of making money, some collecting hobbies can) ?
this is a question I have after reading the 1099's threads replies
0
Comments
Summertime Tax Tip 2009-18
Summer is a time many Americans take their fishing poles and gardening tools out of storage. Hobbies – such as woodworking, stamp collecting and scrapbooking – are often done for pleasure, but can result in a profit.
If your favorite activity does make a profit every year or so, there may be tax implications. You must report income to the IRS from almost all sources, including hobbies.
Here are eight questions that will help determine if your activity is a hobby or a business.
Is the purpose of your activity to make a profit? Generally, your activity is considered a business if it is carried on with the reasonable expectation of earning a profit.
Do you participate in your activity just for fun? Hobbies – also called not-for-profit activities – are those activities that are not pursued for profit.
Do you depend on income from the activity? If so, your activity is likely considered a business.
Have you changed methods of operation to improve profitability? If so, your hobby may actually be a business.
Do you have the knowledge needed to carry on the activity as a successful business? People who carry out hobbies just for fun, often don’t have the business acumen to turn their not-for-profit activity into a profitable business venture.
Have you made a profit in similar activities in the past? This may indicate your activity is a business rather than a not-for-profit hobby. An activity is presumed carried on for profit if it makes a profit in at least three of the last five tax years, including the current year – or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses.
Does the activity make a profit in some years? Even if your activity does not make a profit every year, it still may be considered a business.
Do you expect to make a profit in the future from the appreciation of assets used in the activity? This indicates your activity may be a business rather than a hobby.
If your activity is not carried on for profit, allowable deductions cannot exceed the gross receipts for the activity. If you are conducting a trade or business you may deduct your ordinary and necessary expenses.
More information about not-for-profit activities is available in Publication 535, Business Expenses, available on the IRS.gov Web site or by calling 800-TAX-FORM (800-829-3676).
Michael Kittle Rare Coins --- 1908-S Indian Head Cent Grading Set --- No. 1 1909 Mint Set --- Kittlecoins on Facebook --- Long Beach Table 448
"Do you expect to make a profit in the future from the appreciation of assets used in the activity? This indicates your activity may be a business rather than a hobby. "
Now if you forget your license, almost catch a fish, get ripped at the dealer and don't get a 1099, it's a hobby.
edited for referencing
Re: " Summertime Tax Tip 2009-18
Summer is a time many Americans take their fishing poles and gardening tools out of storage. Hobbies – such as woodworking, stamp collecting and scrapbooking – are often done for pleasure, but can result in a profit.
If your favorite activity does make a profit every year or so, there may be tax implications..."
``https://ebay.us/m/KxolR5
Business - hobby = deduction.
Business you make money
Didn't wanna get me no trade
Never want to be like papa
Working for the boss every night and day
--"Happy", by the Rolling Stones (1972)
https://www.pcgs.com/setregistry/gold/liberty-head-2-1-gold-major-sets/liberty-head-2-1-gold-basic-set-circulation-strikes-1840-1907-cac/alltimeset/268163
<< <i>What's with all of the tax law threads lately? Perhaps Longacre should start a thread discussing the nuances of Subpart F income and deferral regimes under the Internal Revenue Code?
Please don't. I'm having enough trouble staying awake, as it is.
"Seu cabra da peste,
"Sou Mangueira......."
<< <i>What's with all of the tax law threads lately? Perhaps Longacre should start a thread discussing the nuances of Subpart F income and deferral regimes under the Internal Revenue Code?
income and deferral schemes!?!?!
You mean it IS possible for a corp. to book a more than $600 charge in one tax year while the selling corp. books it in a different way in another tax year???
I can't wait for the reply!!!!