If the business does make a profit three out of five consecutive years (two out of seven for training, showing, breeding, or racing horses), then the facts and circumstances will be evaluated to determine if the business is “For-Profit” or hobby. There are 9 factors that are evaluated. In the previous blog we evaluated Factors 1 – 4 of the 9 factors. This blog reviews Factors 5 – 9.
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“For-Profit” Business or Hobby, Analysis of Factors 1 – 4
If the business does make a profit three out of five consecutive years (two out of seven for training, showing, breeding, or racing horses), then the facts and circumstances will be evaluated to determine if the business is “For-Profit” or hobby. There are 9 factors to evaluate. This blog analyzes Factors 1 – 4.
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Tax Return Forms
What are the primary tax return forms and when are these forms due? If you are looking for an answer to these two questions then read further. We will provide you a high level overview on the main tax return forms.
How is a Limited Liability Corporation (LLC) Taxed?
You filed Limited Liability Corporation (LLC) paperwork to the state for your business. It was easy to do and now you have a business. Now what? The tax obligations for your new business LLC will depend on a few factors.
For-Profit Business or Hobby, Facts and Circumstances
Generally, a business is considered “For Profit” if the business generates a profit in at least three out of five consecutive years. For training, showing, breeding, or racing horses, then the business needs to generate a profit for two out of seven years. What if the business does not meet this test?
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Tax Consequences for Determining if a Business is For-Profit or Hobby
It’s important to understand the hobby loss rules when starting a side business. For the first couple of years, it is common for a start up business to lose money. If the side business loses money for several years, the business may be a hobby. The tax consequences of reporting a business as “for profit” versus a hobby can be significant.
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Quote of the month – October 2012
A day lived without doing something good for others is a day not worth living. Mother Teresa
Trust Fund Penalty – Rules for DBA and Single Member LLC
Generally, the IRS has to assess trust fund penalties to make individuals in a corporation personally liable for unpaid payroll taxes. The word “corporation” has meaning in tax law. If the business is not considered a corporation, then the owner is automatically personally liable for unpaid payroll taxes. Read this blog for more information on the trust fund recovery rules for DBAs and Single Member LLCs. Continue reading…