David M. Kaufmann, CPA
1466 Adobe Falls Way
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.
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?
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.
Have me prepare the proper paperwork that you will go along with the 3 out of 5 year rule.
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].
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.