A number of taxpayers who have significant income from other sources reduce their taxable income by reporting losses from activities that may or may not be engaged in for profit. It is up to IRS examiners to make a factual determination whether an activity is engaged in for profit.
IRC § 183 generally limits deductions, in the case of an activity engaged in by a taxpayer, if the activity is not engaged in for profit. The nine elements the IRS considers when make the determination is discussed, as well as what entities §183 applies to. Also discussed is § 183(d) which provides a presumption that an activity is engaged in for profit if the activity is profitable for 3 years of a consecutive 5 year period or 2 years of a consecutive 7 year period for activities that consist of breeding, showing, training, or racing horses. The Form 5213, Election to Postpone Determination as To Whether the Presumption Applies That an Activity Is Engaged in for Profit, is used when taxpayers wish to postpone an IRS determination as to whether the presumption applies that they are engaged in an activity for profit. The webinar will cover these aspects and more.
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