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Hobby vs. Trade or Business


With the increase in the number of small businesses, including people making and selling items from their homes, it’s vitally important for you, the tax preparer, to understand what tax provisions affect small business clients so you can help them be successful. The first step is to determine if, in fact, the activity qualifies as a trade or business rather than a hobby. This self-study course covers the parameters for making that determination, including the basic hobby loss rule and changes made to this rule by TCJA, review of facts and circumstances from court cases, and profit motive. A discussion of reporting income and expenses of nonbusiness activities is included.


Last reviewed for accuracy: October 2023


Webinar Instructor: Debbie Held

Debbie Held has been an instructor with the Tax School since 2000. She has also served as a chapter author and reviewer for the University of Illinois Federal Tax Workbook. She is a graduate of Sangamon State University (University of Illinois at Springfield). She has been employed by the IRS since 1979, spending time as a revenue agent, appeals officer, and most recently as a management analyst for the Communications & Liaison Division. She previously taught various accounting courses at Lincoln Land Community College for 18 years. She is a certified public accountant (CPA) and resides in Raymond, Illinois, where her family farms.

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