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First Page

56

Last Page

60

Abstract

In Crile v. Commissioner, T. C. Memo. 2014-202 (Oct. 2, 2014), the United States Tax Court recently ruled that a tenured art professor’s artistic endeavors constituted a “business” rather than a “hobby.” Internal Revenue Code Section 183 limits taxpayers’ deductions to the extent of income earned if the activity is not engaged in for profit, i.e. a hobby, rather than a business. In this presentation, we examine the nine factors considered by the court in distinguishing between businesses and hobbies and discuss how the facts and circumstances of the taxpayer in this case prompted the court to decide in her favor. Practical recommendations are made to assist taxpayers to determine whether their art constitutes a hobby or an activity engaged in for profit and how to strategize their activities so that they too can deduct expenses despite the fact that a profit may not have been realized.

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