Which of the following factors absolutely must be present for an activity to be considered a trade or business for tax purposes?
A)The activity is profitable most of the time.
B)Taxpayer has experience in the activity.
C)Taxpayer has a mailing address and phone number for his business that is different from his personal address and phone number.
D)Taxpayer has a profit motive for engaging in the activity.
E)All of the above factors must be present to have a trade or business activity.

Question

Quizplus · Accepted Answer

The presence of a profit motive is the most important factor in determining whether an activity constitutes a trade or business for tax purposes. Other factors such as profitability, experience, and having a separate phone number or mailing address can help support the determination, but they are not absolute requirements.

Which of the Following Factors Absolutely Must Be Present for an Activity