What is a Hobby Loss?
The IRS frequently disallows deductions for activities it believes are “not engaged in for profit.” “Hobby Losses”, as the IRS calls them, often involve expenses for horse or dog breeding activities, small scale farming, small livestock operations, airplanes, etc. Because these businesses often grow out of hobbies, they tend to be started without adequate business planning and advice. For some, a business plan and other business like activities established at the outset of the business can make the difference between …