Category: tax shelter

CAN MORE THAN ONE BUSINESS MAKE YOUR HOBBY PROFITABLE?

CAN MORE THAN ONE BUSINESS MAKE YOUR HOBBY PROFITABLE?

Internal Revenue Code §183 disallows losses taken regarding any alleged business where there is not a profit motive.  If a transaction is not being engaged in for profit, the Internal Revenue Service will disallow all losses related to such activity.  The service provides various safe harbors, such as showing a profit three out of five years or five out of seven years.  This will establish a presumption that a hobby is not present, but an actual business is.  What happens when you run more than one trade or business that are related and one activity creates a loss while others create a profit.

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Tax Shelter

The Last Tax Shelter?

Tax shelters have been a bad word since legislation was designed to eliminate what was considered abusive.  From the sweeping language of the Tax Reform Act of 1986, Pub L. 99-514, tax shelters were, in essence, wiped out and became the equivalent of a 4-letter word in tax planning.

But are tax shelters really gone?

Haven’t there been cases where the IRS has alleged that certain devises are still abusive tax shelters?

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