IRS hobby loss rules – Is it a business or hobby?

Description

Abstract: If a start-up business owner is operating at a loss, it’s critical to understand the IRS’s “hobby loss” rules. Business losses are fully deductible, but hobby losses aren’t. Deductions for hobby expenses generally can’t exceed gross receipts (if any) from the activity. Also, the business owner must claim hobby losses as itemized deductions, which may further reduce their tax benefits. This article defines the word “hobby” and explains hobby loss rules.