LisaSTL Wrote:
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> I have always made a profit, meager that it can be
> at times. My understanding, if you continue to
> show losses the IRS will no longer consider it a
> business. I think you need to show a profit 3 out
> of 5 years. Classifying it as a hobby then
> disallows business deductions. It seems that there
> can also be real issues with someone who has a
> full-time job or a spouse who is the main
> breadwinner. The IRS could then consider the
> losses are being used to offset the taxes of the
> full-time job.
I definitely made a profit in real terms, because I get great gas mileage, my car is paid for, and I was lucky enough not to have very many maintenance issues last year. I also got lots of free food, most of which was tax-deductible, and that helped keep my bills down. However, if I were to charge the full mileage amount, I might be cutting it close, because of those few routes I did at the beginning of the year. I won't know for sure until I actually do my taxes, though.
As for the hobby thing, my understanding is pretty much the same: in order for it to be a business, it has to make money, on paper. I do wonder how *much* money must be made, though. Is there a threshold? If I made a dollar, does that count as a profitable year?