Case Study 77: Hobby vs Business Classification - Reduced Revenues

Index - https://steemit.com/tax/@alhofmeister/47caku-tax-blog-index

Introduction
The purpose of this posting is to further demonstrate the difference between hobby and business classifications. The following example assumes that the taxpayer structured their activities as a sole proprietorship.

Solution

As demonstrated above, the self-employment taxes associated with the business classification cause the business classification to be less favorable than the hobby classification. This favorability, however, is largely dependent upon the facts and circumstances surrounding the taxpayer's activities as will be demonstrated in future examples.

References
https://steemit.com/tax/@alhofmeister/hobby-vs-business-classification

Disclaimer
Any accounting, business or tax advice contained in this communication, including attachments and enclosures, is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.