Learn how the IRS distinguishes hobbies from businesses, key criteria, tax implications, and strategies to prove a profit motive.
By attending this presentation on Hobby Loss Rules, participants will gain a clear understanding of how the IRS distinguishes between a profit motivated business activity and an activity that is for personal enjoyment and tax benefits. You will learn the tax implications of that classification and the potential financial consequences of misreporting. The session will cover key IRS criteria, real-world court cases, and practical strategies for proving a profit motive to ensure compliance and avoid costly audits or penalties. Whether you're a small business owner, freelancer, or someone earning income from a passion project, this presentation will provide essential insights to help you maximize deductions legally and safeguard your financial interests.
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Why Lorman?
Over 38 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Agenda
Introduction to Hobby Loss Rules
- Overview of Hobby vs. Business
- Purpose of Hobby Loss Rules
Key Criteria for Determining Hobby vs. Business
- IRS - Key Questions Consider
- Relevant Court Cases
Tax Implications of Hobby Income and Expenses
- Income Reporting Requirements
- Deduction Limitations for Hobby Expenses
- Relevant Court Cases
Strategies to Prove Profit Motive
- Best Practices for Establishing Business Intent
- Case Studies and Court Cases
Risks of Non-Compliance
- IRS Audits
- Penalties for Misclassification
- Relevant Court Cases
Q&A Session
Conclusion and Takeaways
- Summary of Key Points
- Resources for Further Learning
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Credit
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Why Lorman?
Over 38 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Credits
OnDemand Course
This course was last revised on April 23, 2025.
Call 1-866-352-9540 for further credit information.
- AIPB 2.0
- This program is acceptable for 2.0 CPEC(s) towards the CB designation through the American Institute of Professional Bookkeepers (AIPB).
This program does NOT qualify, nor meet the National Standard for NASBA accreditation.
MP3 Download
This program does NOT qualify, nor meet the National Standard for NASBA accreditation.
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Why Lorman?
Over 38 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
Faculty
David P. Smith, CPA, MBA, CM&AA
Smith Patrick CPAs
- Managing Partner of Smith Patrick CPAs
- Experienced CPA and Business Advisor
- Specializes in financial strategies for business transactions and growth, helping business owners make informed financial decisions
- Recognized speaker, author, and media contributor, presenting on tax law, financial reporting, and business strategy at professional conferences and universities; published in Asset Magazine and featured on Saint Louis on the Air discussing complex financial topics
- Serves as Chair of the Missouri Society of CPAs (MOCPA) Legislative Committee, Treasurer of the Missouri Cannabis Trade Association, and is involved in the leadership of several community organizations, including the Old Webster Square Commission and Lighthouse for the Blind
- M.B.A. Degree in finance, Indiana University; B.S. Degree in engineering, Purdue University
- Certified Public Accountant (CPA), Certified Merger & Acquisition Advisor (CM&AA), and Registered Investment Advisor (RIA)
- Can be contacted at [email protected] or 314-961-1600
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Why Lorman?
Over 38 years and 1.4 million customers worth of experience providing continuing education. Our passion is providing you world-class training to help you succeed in business and as a professional.
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