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Hobby Loss |
Also found in: Legal | 0.01 sec. |
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Hobby Loss A loss a taxpayer may not deduct from his/her taxable income because it occurred in the pursuit of personal pleasure. Suppose one sells lemonade for fun on Saturdays and takes a loss in doing so. This will likely be considered a hobby loss because one is not likely to be actively pursuing profit. The IRS applies what is called the "hobby loss rule" to determine whether it considers a loss to be hobby or business related; this rule states that an activity profitable three years out of every five can be considered a business. So the lemonade stand, which may never be profitable, will probably be considered a hobby loss. Hobby Loss A nondeductible loss arising from a personal hobby as contrasted with a loss arising from an activity engaged in for profit. How to thank TFD for its existence? Tell a friend about us, add a link to this page, add the site to iGoogle, or visit webmaster's page for free fun content. |
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| ? Mentioned in | ? References in periodicals archive | |
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| Proper grouping may help a taxpayer avoid the application of the hobby loss rules. As expected, these reasons coincide with those found in the regulations of the hobby loss sections provided to the participants at the outset of the study. The IRS raised hobby loss and passive activity issues. |
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