Business vs Hobby

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Subject Author Date Business vs Hobby rlsusenet@NOSPAMPUHLEEZschnapp 02-07-2008  Re: Business vs Hobby Alan 02-07-2008  Re: Business vs Hobby rlsusenet@NOSPAMPUHLEEZsc... 02-08-2008  Re: Business vs Hobby ed 02-08-2008  Re: Business vs Hobby rlsusenet@NOSPAMPUHLEEZsc... 02-08-2008
Posted by rlsusenet@NOSPAMPUHLEEZschnapp on February 7, 2008, 5:34 pm Please log in for more thread options Can someone point me at the elements that distinguish a business (Schedule C) from a hobby (1040 line 21 "other income")? Here's the thing: I do a lot of contesting (participate in local radio/TV station promo programs, sweepstakes, etc.). I have some small expenses, primarily the costs of driving to the stations to pick up prizes. I could also make a case that a small proportion of my internet connection costs are attributable to this enterprise. I've made money at this enterprise for the last 3+ years, and would have still made money even if I had been able to deduct my expenses. I'm considering declaring this to be a Schedule C business so that my expenses are not unreasonably limited by the 2% AGI floor. Does anyone have any thoughts on this? -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by Alan on February 7, 2008, 6:52 pm Please log in for more thread options rlsusenet@NOSPAMPUHLEEZschnapp.org wrote: > Can someone point me at the elements that distinguish a business > (Schedule C) from a hobby (1040 line 21 "other income")? > > Here's the thing: I do a lot of contesting (participate in local > radio/TV station promo programs, sweepstakes, etc.). I have some small > expenses, primarily the costs of driving to the stations to pick up > prizes. I could also make a case that a small proportion of my internet > connection costs are attributable to this enterprise. > > I've made money at this enterprise for the last 3+ years, and would have > still made money even if I had been able to deduct my expenses. > > I'm considering declaring this to be a Schedule C business so that my > expenses are not unreasonably limited by the 2% AGI floor. > > Does anyone have any thoughts on this? > Here's what the IRS says: http://www.irs.gov/publications/p535/ch01.html#d0e885 Don't miss the line that says: No one factor alone is decisive. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by rlsusenet@NOSPAMPUHLEEZschnapp on February 8, 2008, 12:39 am Please log in for more thread options Alan wrote: > rlsusenet@NOSPAMPUHLEEZschnapp.org wrote: >> Can someone point me at the elements that distinguish a business >> (Schedule C) from a hobby (1040 line 21 "other income")? >> >> Here's the thing: I do a lot of contesting (participate in local >> radio/TV station promo programs, sweepstakes, etc.). I have some >> small expenses, primarily the costs of driving to the stations to pick >> up prizes. I could also make a case that a small proportion of my >> internet connection costs are attributable to this enterprise. >> >> I've made money at this enterprise for the last 3+ years, and would >> have still made money even if I had been able to deduct my expenses. >> >> I'm considering declaring this to be a Schedule C business so that my >> expenses are not unreasonably limited by the 2% AGI floor. >> >> Does anyone have any thoughts on this? >> > Here's what the IRS says: > http://www.irs.gov/publications/p535/ch01.html#d0e885 > > Don't miss the line that says: No one factor alone is decisive. Yup, 'cause otherwise, "You depend on the income for your livelihood" would be a killer, and that would be true for an awful lot of people with side businesses, such as Amway (does Amway still exist?). Interesting. Thanks very much for the pointer! -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by ed on February 8, 2008, 12:41 am Please log in for more thread options > rlsuse...@NOSPAMPUHLEEZschnapp.org wrote: > > Can someone point me at the elements that distinguish a business > > (Schedule C) from a hobby (1040 line 21 "other income")? > > > Here's the thing:  I do a lot of contesting (participate in local > > radio/TV station promo programs, sweepstakes, etc.).  I have some small > > expenses, primarily the costs of driving to the stations to pick up > > prizes.  I could also make a case that a small proportion of my internet > > connection costs are attributable to this enterprise. > > > I've made money at this enterprise for the last 3+ years, and would have > > still made money even if I had been able to deduct my expenses. > > > I'm considering declaring this to be a Schedule C business so that my > > expenses are not unreasonably limited by the 2% AGI floor. > > > Does anyone have any thoughts on this? > > Here's what the IRS says:http://www.irs.gov/publications/p535/ch01.html#d0e885 > > Don't miss the line that says: No one factor alone is decisive. > > -- > << ------------------------------------------------------- >> > << The foregoing was not intended or written to be used,   >> > << nor can it used, for the purpose of avoiding penalties  >> > << that may be imposed upon the taxpayer.                  >> > <<                                                         >> > <<   The Charter and the Guidelines for submitting posts   >> > <<  to this newsgroup as well as our anti-spamming policy  >> > <<                  are atwww.asktax.org.                 >> > <<         Copyright (2007) - All rights reserved.         >> > << ------------------------------------------------------- >>- Hide quoted text - > > - Show quoted text - You should have been doing this on a Schedule C since incedption. Sounds like it was your choice to put it on line 21. The "hobby" thing is a forced issue with the IRS, not something you should try to satisfy. If they can't prove you lost money in 3 of the past 5 years they can't force you into hobby status. You could lose money forever and not be a hobby if you are in business to profit, hopefully. The flip side is that on line 21 you didn't have to pay SE taxes of over 15%. Are you sure you don't want to be a hobby?? ed -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Posted by rlsusenet@NOSPAMPUHLEEZschnapp on February 8, 2008, 1:45 pm Please log in for more thread options ed wrote: >> rlsuse...@NOSPAMPUHLEEZschnapp.org wrote: >>> Can someone point me at the elements that distinguish a business >>> (Schedule C) from a hobby (1040 line 21 "other income")? >>> Here's the thing: I do a lot of contesting (participate in local >>> radio/TV station promo programs, sweepstakes, etc.). I have some small >>> expenses, primarily the costs of driving to the stations to pick up >>> prizes. I could also make a case that a small proportion of my internet >>> connection costs are attributable to this enterprise. >>> I've made money at this enterprise for the last 3+ years, and would have >>> still made money even if I had been able to deduct my expenses. >>> I'm considering declaring this to be a Schedule C business so that my >>> expenses are not unreasonably limited by the 2% AGI floor. >>> Does anyone have any thoughts on this? >> Here's what the IRS says:http://www.irs.gov/publications/p535/ch01.html#d0e885 >> >> Don't miss the line that says: No one factor alone is decisive. >> >> -- >> << ------------------------------------------------------- >> >> << The foregoing was not intended or written to be used, >> >> << nor can it used, for the purpose of avoiding penalties >> >> << that may be imposed upon the taxpayer. >> >> << >> >> << The Charter and the Guidelines for submitting posts >> >> << to this newsgroup as well as our anti-spamming policy >> >> << are atwww.asktax.org. >> >> << Copyright (2007) - All rights reserved. >> >> << ------------------------------------------------------- >>- Hide quoted text - >> >> - Show quoted text - > > You should have been doing this on a Schedule C since incedption. > Sounds like it was your choice to put it on line 21. The "hobby" thing > is a forced issue with the IRS, not something you should try to > satisfy. If they can't prove you lost money in 3 of the past 5 years > they can't force you into hobby status. You could lose money forever > and not be a hobby if you are in business to profit, hopefully. > > The flip side is that on line 21 you didn't have to pay SE taxes of > over 15%. Are you sure you don't want to be a hobby?? Another excellent point. If my regular consulting biz gets me above the FICA ceiling, then the answer is "yes". Otherwise, you're right: the deductible expenses will be wiped out by SE tax. ========================================= MODERATOR'S COMMENT: When responding to a post, please delete all parts of the prior post that are not necessary either for context or are the part to which you specifically respond. Place your comments directly after the portion to which you respond. Thanks for your assistance. -- << ------------------------------------------------------- >> << The foregoing was not intended or written to be used, >> << nor can it used, for the purpose of avoiding penalties >> << that may be imposed upon the taxpayer. >> << >> << The Charter and the Guidelines for submitting posts >> << to this newsgroup as well as our anti-spamming policy >> << are at www.asktax.org. >> << Copyright (2007) - All rights reserved. >> << ------------------------------------------------------- >> Similar Threads Posted Filing as Sole Proprieter for my main business but have small general partnership business on the side March 16, 2009, 11:37 pm Mileage Deductions When Driving for Both Business and Non-Business. March 1, 2007, 9:08 pm Transfer Business Vehicle From One Business To Another June 12, 2006, 9:18 pm Re: Business Tax ID prior to business plan June 29, 2006, 12:15 am Will there be tax deductions for my LLC business? 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