https://ttlc.intuit.com/community/taxes/discussion/purchased-sailboat-in-2015-contracted-to-charter-company-splitting-income-first-2-years-expenses/01/498964#M204740 <P>In tax years 2015 and 2016 depreciation and expenses exceeded charter income causing a loss 2 years in a row. Expenses exceed income again in 2017 but IRS wants to see a profit for 3 of 5 years or lose business status and become a hobby. Should I declare a loss again and wait for IRS audit?&nbsp; Income was overestimated in my business model.<BR /></P> Wed, 05 Jun 2019 01:48:29 GMT hathonl 2019-06-05T01:48:29Z https://ttlc.intuit.com/community/taxes/discussion/purchased-sailboat-in-2015-contracted-to-charter-company-splitting-income-first-2-years-expenses/01/498964#M204740 <P>In tax years 2015 and 2016 depreciation and expenses exceeded charter income causing a loss 2 years in a row. Expenses exceed income again in 2017 but IRS wants to see a profit for 3 of 5 years or lose business status and become a hobby. Should I declare a loss again and wait for IRS audit?&nbsp; Income was overestimated in my business model.<BR /></P> Wed, 05 Jun 2019 01:48:29 GMT https://ttlc.intuit.com/community/taxes/discussion/purchased-sailboat-in-2015-contracted-to-charter-company-splitting-income-first-2-years-expenses/01/498964#M204740 hathonl 2019-06-05T01:48:29Z https://ttlc.intuit.com/community/taxes/discussion/the-determination-of-profit-for-3-out-of-5-years-is-not/01/498973#M204745 <P></P><P> </P><P>The determination of “profit for 3 out of 5 years” is not as black and white as it sounds.&nbsp; Other factors can be taken into account.</P> <P>Certain things such as the amount of loss, the profit motive, whether you have the business experience and knowledge to be able to operate in a businesslike manner to profit from the activity, the amount of time spent operating the business, whether you have other sources of income, etc. must be considered.&nbsp; Also, some businesses simply take more time to get off the ground to make a profit.&nbsp; These are things that you need to consider yourself as you decide whether to continue to move forward as a business or convert it to a hobby.&nbsp; </P> <P>For example, if you have a full-time job and operate the business on the side, then continuing to report a loss (especially if it is a significant one compared to your other income) would make the business appear more like a hobby.&nbsp; </P> <P>Only you can see the whole picture for your business to decide whether it is time to change to a hobby or continue as a business, but claiming a loss for the third year in a row should not be the only determining factor.&nbsp; </P> <P></P><BR /> Wed, 05 Jun 2019 01:48:31 GMT https://ttlc.intuit.com/community/taxes/discussion/the-determination-of-profit-for-3-out-of-5-years-is-not/01/498973#M204745 AnnetteB 2019-06-05T01:48:31Z