A sad state of affairs . . .

[Mark T. DeNucci, Sr.]

Originally Posted by bob jenkins

I think you have to show a profit occasionally (the specifics are in the regs -- something like 2 years out of 5,...) or you risk it getting classified as a hobby.

Bob:

You are correct about the two years out of the previous five years, BUT!!!

In June 1996, I particated in the ABL tryout camp at Emory University in Atlanta. And one of my partners was an IRS agent who was located in Washington, DC, and I asked him about that rule. He told me that before the IRS invokes that rule, it looks at a number of factors: 1) The gross income generated by the business; 2) The type of business; and 3) The type of deductions that are germane to that particular type of business.

The IRS realizes that the officiating of amateur sports is a travel intensive business. It is not unusal for a sports official, i.e., to have gross officiating income of $7,500 in a year and have a mileage deduction of $9,000. Just last year (2008), the mileage deduction was $0.505/mile the first six months of the year and $0.585/mile for the last six months of the year. The IRS agent went on to compare the type of deductions that sports officiating generate compared to gross income with a person whose business was buying and selling coins: If the coin dealer consistently claimes a gross income of $500 or $750 per year and expenses of $10,000 per year, that type of Schedule C is going to raise a HUGE RED FLAG with the IRS.

MTD, Sr.