I am not a CPA or in the medical profession I subscribe to your newsletter because it has "good stuff" in it. I have my own business and am studying to become an Enrolled Agent.

I worked for a CPA who had farmers who file Schedule C and consistently show losses year after year after year. Nothing happens to them.

Why is this?

Zip Code: 44460

Good question.

Even if you have losses year after year, the activity is not automatically classified as a hobby. You need to work through those 9 factors to determine whether there is a profit motive for the activity.

As long as 5 of the 9 factors indicate the activity is not a hobby, then the losses are fully deductible to the taxpayer.

Zip Code: 01801