Strategy: Turn your dream into reality, but prepare to prove that you intend to turn a profit from the activity.
Why? Because if you’re not careful,the “hobby loss” rules can trip you. In effect, you won’t be able to deduct the expenses exceeding the income from the activity.
Here’s the whole story: So long as you’re running a legit business, you can generally deduct all of your ordinary and necessary expenses, even if you show a loss for the year. In fact, this is pretty common in the early years of ownership. But deductions are limited if the IRS considers the activity to be a hobby rather than a business.
You can deduct the expenses attributable to a hobby only up to the amount of t...(register to read more)
- Small Business Tax Deduction Strategies No matches