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Old 03-21-2014, 11:22 PM
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Schedule C instructions puzzling

The second line of the Schedule C instructions say "An activity qualifies as a business if your primary purpose for engaging in the activity is for income or profit, and you are engaged in the activity with continuity and regularity. For example, a sporadic activity or hobby does not qualify as a business"
Now - what is sporadic? Last year I did two shortish consultancy jobs (got 1099s) but the were neither continual nor regular. I shall probably not repeat them. So, to my mind, I do not have a business. Yet I see from other entries that folk who did one small job were told they had to do a schedule C. What gives?



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Old 03-22-2014, 05:25 PM
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Originally Posted by MikeA View Post
Now - what is sporadic? Last year I did two shortish consultancy jobs (got 1099s) but the were neither continual nor regular. I shall probably not repeat them. So, to my mind, I do not have a business. Yet I see from other entries that folk who did one small job were told they had to do a schedule C. What gives?
I guess it is technical issue;in general, Trade or business activities and activities engaged in for the production of income are activities engaged in for profit; an activity is presumed for profit if it makes a profit in at least three of the last five tax years, including the current year or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses. Generally, if you are just in it for fun, even if you are making money doing it, what you are doing is a hobby, rather than a business. If you begin taking it seriously, cut back on hours, fund a major purchase, or otherwise get into profit analysis, you will probably need to get a business license and organize as a sole proprietorship or other type of business. The line between hobby and business usually involves both intent and extremity. You may be intending to make a profit, but if you only earn $20 in a year, you can get by with calling it a hobby. Your intent may be to have fun, but if you make $5k per month doing it, you will be considered to be running a business. If you fall into a gray area, please consult with the IRS



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