Chapter 8: Other Deductions, Penalties, and Loss Disallowance

01.Core Concepts

• Activity not entered into for profit • Personal pleasure associated with activity • Examples:  Raising dogs  Raising horses  Sailboat racing  Gardening • Sometimes difficult to determine if an activity is profit motivated or a hobby • Regulations provide nine factors to consider in making this determination • TCJA 2017 suspends all miscellaneous itemized deductions subject to the 2% floor from 2018-2025. Consequently, hobby expenses are not deductible during this period. • OBBBA permanently repeals the deduction for miscellaneous itemized deductions subject to the 2% floor.