Definition from Nolo’s Plain-English Law Dictionary
A rebuttable IRS presumption that a business venture that does not make a profit in three out of five consecutive years of operation is a hobby and not a business for tax purposes. Not meeting this test has significant tax consequences because businesses can take advantage of many tax benefits and advantages that hobbies do not get.
Definition provided by Nolo’s Plain-English Law Dictionary.
August 19, 2010, 5:25 pm