Advising Clients Regarding Hobbies vs. Businesses
2 CPE for AFSP, EA, CFP®, CPA, CRTP
When a client starts a new activity, it is key to determine if they are truly in a for-profit trade or business and not just a not-for-profit hobby. During this session, we’ll discuss analyzing the taxpayer’s activity to determine if it is a hobby or for-profit trade or business while using the nine factors outlined in §183. After we complete an analysis, we’ll then discuss how to report the income, deduct the expenses and which form to complete depending on if the activity is a hobby or a for-profit trade or business. In addition, we’ll review the safe harbor rules for postponing the determination of for-profit or not-for-profit when an activity has losses in its first few years.
Objectives
Upon completion of this session, you will be able to:
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Differentiate between a for-profit trade or business and a not-for-profit hobby
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Explain how to report the income and deductions for a for-profit trade or business and a not-for-profit hobby for an individual
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Describe the safe harbor rules for postponing the for profit and not-for-profit determination
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Summarize the reporting requirements for a for-profit trade or business and a not-for-profit hobby
CPE information
Duration: 100 minutes
Course level: Basic
Prerequisite: None
Advanced preparation: None
Delivery method: Group Live
