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HOBBY OR FOR-PROFIT ACTIVITY? THE ANSWER MAKES A BIG DIFFERENCE FOR TAX PURPOSES

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  Article Highlights: Hobby Versus For-Profit Endeavor  Factors Used to Determine For-Profit  Three out of Five Rule  Hobby Deductions  Sales from Collections  If you are engaged in an activity that produces income , the big tax question is whether the activity is a hobby or a business. The tax treatment of your income or loss from this endeavor hinges on the answer. The tax code (Section 183 – the so-called “hobby loss rule”) limits deductions when an activity is not engaged in for profit, resulting in no loss being deductible for a hobby. A hobby is any activity that a person pursues because they enjoy it and with no intention of making a profit. This differs from operating a business with the intention of making a profit. That being said, it isn’t always clear-cut whether the activity is a hobby or undertaken to make a profit. The IRS has guidelines for determining whether an activity is carried on for profit, such as a business or investment activity, o...
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Stone Mountain Tax Preparation and Planning Services - Cole & Grogan Accounting & Taxes

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TAX PREPARATION AND PLANNING Take the stress out of tax time. Tax Preparation and Planning Cole & Grogan Accounting & Taxes has the expertise to provide you with the services that you need.  Dedicated to keeping our tax preparation skills honed with continuing education courses throughout the year, we are highly qualified to prepare tax returns for all fifty states. Our goal is to make the preparation process as easy as possible for you and minimize your tax liability with careful planning. Your tax preparation interview can be conducted either in person, by mail, or e-mail - whichever is most convenient for you.  Whatever your circumstances may be, we are here to give you the best advice to help you get through life’s challenges. Whether you need current year returns prepared or need to plan for retirement or your child’s education, our professional team can assist you with all of your needs. This office provides many services, including the following: Individual Tax...
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