For the years 2012 through 2016 (inclusive)Mary,a best-selling author,has been involved in operating an antique store.In 2012,2013 and 2014 her revenue exceeded the expenses from the activity.In 2015 and 2016,the antique store generated a loss.Which statement is correct?

Question

Quizplus · Accepted Answer

The activity is presumed to be a business, as Mary has been involved in operating an antique store for multiple years and generated revenue for the majority of those years. However, the IRS may still try to prove that it is a hobby, especially since Mary incurred losses in the last two years. Ultimately, the determination of whether the activity is a business or hobby will depend on various factors, such as the degree of time and effort put into the activity and the taxpayer's intent to make a profit.

For the Years 2012 Through 2016 (Inclusive)Mary,a Best-Selling Author,has Been