Taxpayers who are in business to make a profit can generally deduct related expenses on their tax returns. If the IRS doubts a profit motive exists, it may deem an activity to be a hobby with a limited ability to deduct costs. The burden to prove there’s a profit motive is on the taxpayer. In one case, the IRS found a “green” home construction partnership was a hobby. But the owners, a married couple and their daughter, showed they did operate in a businesslike fashion, consistent with a profit motive. They possessed industry expertise, spent substantial time on the activity and succeeded in entering new markets. The U.S. Tax Court upheld the for-profit business status. (TC Memo 2022-17) #irs #taxpayer #profit #business #entrepreneur

What Steps To Take When You Discover Tax Filing Errors
Filing taxes accurately is crucial for maintaining your financial well-being. Mistakes on your tax return can lead to headaches, unnecessary penalties, or even audits that nobody wants to face. Life throws a curveball now and then, and dealing with tax errors is one...
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