Making ‘Work’ of a Passion Could Turn Hobby into Business for Tax Purposes

One of the stickiest areas of tax practice is determining if a taxpayer’s passion is a hobby or a business for tax purposes. Of course, the IRS cares little about such questions when taxpayers profit from their hobbies-the ready answer is that such profits are always taxable. Losses, however, are a different issue and taxpayers who lose money in the course of their hobbies often find that they are unable to write off those losses for tax purposes under the weight of much Tax Court precedent and IRS regulations and interpretations. In TAXES: The Tax Magazine, Professor Paul J. Brennan outlines the history, current thinking and many contradictions in how the Tax Court has looked at whether an enterprise is a hobby or a business for tax purposes.

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This story is from the CCH’s monthly Focus on Tax newsletter, which provides advise and guidance on federal and state tax issues for tax and accounting professionals.

Read this article from CCH’s Journal of Taxation of Financial Products.

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Wolters Kluwer Tax and Accounting

Wolters Kluwer Tax and Accounting is a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency. Wolters Kluwer Tax and Accounting is part of Wolters Kluwer N.V. (AEX: WKL), a global leader in information services and solutions for professionals in the health, tax and accounting, risk and compliance, finance and legal sectors. We help our customers make critical decisions every day by providing expert solutions that combine deep domain knowledge with specialized technology and services. Wolters Kluwer reported 2016 annual revenues of €4.3 billion. The company, headquartered in Alphen aan den Rijn, the Netherlands, serves customers in over 180 countries, maintains operations in over 40 countries and employs 19,000 people worldwide. Wolters Kluwer shares are listed on Euronext Amsterdam (WKL) and are included in the AEX and Euronext 100 indices. Wolters Kluwer has a sponsored Level 1 American Depositary Receipt program. The ADRs are traded on the over-the-counter market in the U.S. (WTKWY).

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