The petitioner was an art teacher who inherited a hobby store from her father upon his death. At the time, the petitioner was an art teacher in Nevada. The hobby store was in Idaho, but was adjacent to a residence that she owned and lived in. The petitioner hired a volunteer to watch over the store on a daily basis and she assisted with the business when she was in Idaho. The store was open daily from 8-5, but incurred small net losses for each of the years in issue which the IRS denied under the hobby loss rules. However, based on the nine factors of Treas. Reg. Sec. 1.183-2(b), the court determined that the petitioner operated the hobby business as a business with a profit intent. She conducted the activity as a profitable business, retained the volunteer who had worked with her father, took over the business aspects after her father's death, developed the customer base, did not have substantial income from other sources and did not derive personal pleasure from the activity. Savello v. Comr., T.C. Memo. 2015-24.
Hobby Store Not a Hobby.
Date of decision:
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