My thoughts are more along the lines below. It's not a knock at Bob, but it's the intentions of making trailers. The IRS (those guys we really love to H*T*) define a hobby in something you're not going to make a profit at.
I.e. I slapped some parts together and am only charging you cost (no labor, no markup), because if I sit in this recliner any longer, my wife will kill me for listening to the TV to loud, vs
a business which is to gain something (profit) out of the endeavor.. a few of the items that the IRS uses is a) have you done this before and made a profit? the others are listed below.
Again, I'm not here to Bash ANYONE, regardless of the circumstances. That's Why I'm here for Expo, but based on my intelligent mind (and the family of Accountants and Bookeepers I married into (three bookeepers, one forensic accountant, lots of messy divorces.. Think 7 grandparents.. who's house do you really want to go to???) then you have a lot of really boring conversations about Tax code and liabilities.. Think X-mas dinners... Hmmmmm.. Anyway.
His statements towards email me and I'll quote you and having a name for the trailer, would lead scepticism to anyone of any intelligence. In today's electronic age any intelligent attorney can sequester any backup file to find out the details, my life as a network administrator and programmer leave quite a trail for anyone to find. Expo Like any other forum is backed up. Either by the administrators or the hosting service. Not to mention plenty of Google sites.. So Bob's had his say, AT has had theirs, everyone else has gone to new lows and I say let GOD (yep religion.. delete post now) or the attorneys sort it all out. Let's keep it on the lighter side... :victory:
Hobby vs. business
The Internal Revenue Service defines a hobby as an activity you pursue without expecting to make a taxable profit. Basically you do it because you like it, regardless of the cost.
But if you demonstrate that you are involved in an activity with the expectation of making money on it, the IRS will consider it a business. As such, you'll be able to deduct expenses directly from your income. You even can deduct overall business losses in the years you don't turn a profit.
You must, however, make the right moves to convince the IRS that your sideline is a legitimate business.
What constitutes a business
The IRS uses two tests in determining whether your activity is a business rather than a hobby.
First, the profit test demands that you show you earned money on the activity in three out of five years.
If you can't meet the profits test, you get another chance to convince the IRS that you are running a business by passing the factors-and-circumstance test. Here, the tax agency takes a subjective, individualized look at your pursuit.
Basically, the IRS examines:
• Whether you carry on the activity in a businesslike manner. This includes, for example, keeping good books and records, promoting your business and holding down costs where possible.
• How much time and effort you devote to the enterprise.
• Whether you depend on income from the activity for your livelihood.
• If your losses are due to circumstances beyond your control or are normal for a business in its startup phase.
• Whether you change your methods of operation in an attempt to improve profitability.
• The knowledge and background you (or your advisers) have in running such a business.
• If you were successful in making a profit in similar activities in the past.
• Whether the activity makes a profit in some years and, if so, how much.
• Whether you can expect to make a future profit from the appreciation of the assets used in the activity.
• The element of personal pleasure involved in the activity. That doesn't mean you can't enjoy your new business, but you better be getting more out of it than just a good time.
