real business

In a case that is either ironic, or a case of foxes guarding the henhouse (or both), an IRS auditor was himself audited and expenses disallowed when his greyhound racing business was found to be a hobby.

If you’re operating an MLM as a part-time business to augment your regular W-2 job, take note! The IRS is taking a look at these businesses with an eye to abusive deductions. If your business doesn’t measure up, you could have a potential problem on your hands.

One of the big benefits of having a business is getting a bunch of write-offs that you just can’t get as an employee. It’s a little ironic because when I’m talking to an eBay Seller, I have to convince them they really have a business because they don’t understand the business write-offs. But with a MLM’er, I’m having to check to make sure that they REALLY are operating like a business.

A business, hands down, is one of the best way to save on taxes. But, that doesn’t mean that you can simply declare “I have a business” and get thousands of newly found deductions.

First, you must prove that you have a business. You also need to prove that the deductions are ordinary and necessary to the production of income. And, finally, you need to be able to prove that you paid for the expense.

When Does Your Hobby Become a Business?