Tax exemption tips

The IRS has very useful information, forms and publications available on the Internet at: www.irs.gov. Publication 535, Business Expenses, states that: "In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether: 1. You carry on the activity in a businesslike manner, 2. The time and effort you put into the activity indicate you intend to make it profitable, 3. You depend on income from the activity for your livelihood, 4. Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business), 5. You change your methods of operation in an attempt to improve profitability, 6. You, or your advisors, have the knowledge needed to carry on the activity as a successful business, 7. You were successful in making a profit in similar activities in the past, 8. The activity makes a profit in some years, and how much profit it makes, and 9. You can expect to make a future profit from the appreciation of the assets used in the activity." If you do not work for profit the IRS will consider your activity to be a hobby. There are advantages to both: your business as a 'hobby' and your business as a 'for profit venture'. But tax strategies depend on your particular situation and you must seek help and counsel from your tax advisors.

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