The IRS nine-part test to help determine whether you have a hobby or business.

1. Do you carry on the activity in a business-like manner? *

Yes

2. Are you or your advisors experts in the field? *

Yes

3. Do you expend a lot of time and effort? *

Yes

4. Do you expect that assets used in the activity may appreciate? (Even if you make no profit from operations, investing in land or other assets that appreciate and generate income implies running a business.) *

Yes

5. Have you been successful in carrying on other similar or dissimilar activities? *

Yes

6. Do you have a history of income or losses with respect to the activity? *

Yes

7. Did the activity make a profit, even a small one, in three of the last five years? *

Yes

8. Do you have no substantial income or capital from other sources?

(If you have significant income from other sources, this supports the idea of you engaging in a hobby. If you rely on this activity for income, then it is much more likely a business.) *

Yes

9. Does the activity lack personal pleasure or recreational elements? *

Yes

If you answered “yes” to most of the above questions you more than likely classify as a business.

If you answered “no” to most of the questions, you probably operate as a hobby.

Remember that the real question is your intent.

8.1: Financial Basics

The IRS nine-part test to help determine whether you have a hobby or business.