How A CPA Can Help You:

You Have A Hobby-Business That Is Losing Money

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David M. Kaufmann, CPA

Voice: 720.493.4804

Email: contact2@kaufmann-cpa.com

Physical Address:

2831 Wyecliff Way
Highlands Ranch, CO 80126

Mailing Address:

PO Box 632285
Highlands Ranch, CO 801
63-2285

Facts:

You love coaching your kids baseball teams, and you have decided to make an instructional video about pitching.

Your first year's sales are a disappointment, and this activity has lost money.

The IRS decides to audit the return.

Problem:

Generally, if you can prove that you have a profit motive, the losses are deductible.

If your business is profitable for 3 out of 5 years, it is assumed that you do have a profit motive.

How do you prove a profit motive?

Solution:

Solution A

Before you start your business, discuss it with me. I can give you a list of things to do that the IRS has indicated shows a tendency to have a profit motive. Setting up the business properly from the start can make all the difference in the world.

Solution B

Have me prepare the proper paperwork that you will go along with the 3 out of 5 year rule.

Solution C

I can represent you a the IRS audit. The chances of success improve if you followed the list of steps I gave you before you started your business [Solution A].

Warning

You have to prove that you had a profit motive. The IRS does not have to prove that you didn't have a profit motive.