• Suite 200, 1708 Peachtree St. NW, Atlanta, GA 30309. 404-607-8400
  • 1516 Village Harbor Drive, Lake Wylie, SC 29710. 803-831-0263
  • 404-607-8400 & 803-831-0263

HOBBY SHOP INHERITED BY ART TEACHER WAS A BUSINESS, NOT JUST A HOBBY

On March 30, 2015 posted in Specialty Tax Services Blog

HOBBY SHOP INHERITED BY ART TEACHER WAS A BUSINESS, NOT JUST A HOBBY

The U.S. Tax Court has held that a model airplane store that an art teacher inherited from her father was a trade or business, not a hobby. The art teacher taught in Nevada and owned and managed the shop, which was in Idaho. The Court found that she had a profit motive and that the business activity was not just for recreational purposes. The distinction is important. If an activity is classified as a business, then expenses can be deducted without limitation on Schedule C of a taxpayer’s individual return. If the activity is considered a hobby, expenses can only be used to offset income from the hobby. To read the opinion, see Savello, TC Memo 2015-24.