Question

Which of the following factors is not used to determine whether an activity is a hobby or a business?A) the taxpayer's expertise in the activityB) the taxpayer's financial statusC) the personal pleasure derived from the activityD) the success of the taxpayer in other dissimilar activities

Answer 1

Answer: Option D    

 

Explanation: As per the tax laws, the activities in which the taxpayer has expertise in and he or she is getting some  kind of monetary benefit from performing it, then such activity will be seen as a business.

However, if the taxpayer do not repetitively perform an activity and derives no personal gain other than pleasure from performing such activity, then it will be a hobby.

Hence from the above we can conclude that the correct option is D.