The term “Hobby Loss Rule” is quite significant and basically states that the expenditure to pursue a recreational activity which is not recouped as the law allows deduction of expense only to the extent of income earned by the hobby or recreational activity. Internal Revenue Code (IRC) §183 provides the law to curb perceived loss deduction abuses by hobbyists. Simply put , while in case of a business activity , one gets deduction of all expenses/losses incurred even if there is no profit , the same benefit is not available if the activity is treated as hobby .In case of hobbies , the expenses related to the hobby are only deductible up to the amount of any income you earned from your hobby. This is termed as hobby loss rules . The hobby loss rules apply to individuals, S corporations, trusts, estates, and partnerships, but not to C corporations.
IRS Tax Debt : Power of IRS to Collect It & What You Should Do
When a taxpayer has a tax debt , the Internal Revenue Code provides a number of legal provisions that can be used by the IRS to collect it. The IRS tax debt can actually increase the demand periodically on account of interest on the tax debt, penalty sum for the delay in tax payments etc. …
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