In determining whether an activity should be classified as a business or as a hobby, the satisfaction of the presumption (i.e., profit in at least 3 out of 5 years) ensures treatment as a business.

Question

Quizplus · Accepted Answer

The presumption of profit in 3 out of 5 years is a guideline, not a guarantee, for classifying an activity as a business; other factors are also considered by the IRS.

In Determining Whether an Activity Should Be Classified as a Business