On 2011-03-08, Cydrome Leader wrote:
Ignoramus1796 wrote:
On 2011-03-07, Jon Elson wrote:
On 03/07/2011 12:22 PM, Ignoramus1796 wrote:
On 2011-03-07, wrote:
The local IRS agent reads this news group and has made notes to look
at your next year's tax return to see how you report this money!


Naturally, I report all my income.

i

But, now you qualify (if you didn't before) for the incredible
government giveaway called "exemption for business use of your home"
IRS form 8829.

Also, in Missouri (don't know about IL) they have incredible exemptions
on state use tax for anything that keeps a machine running or upgrades
it. So, a CNC conversion or retrofit of a dead control should be able
to be bought tax-free, assuming the original machine was capital
equipment. Also, drill bits, end mills, oil, etc. are tax-free.
I had to print out the relevant state tax commission rulings and read
them three times to believe what I was seeing.

I have no idea if other states have such a generous arrangement.

Jon

I think that tax authorities would have a hard time proving that
business equipment and repairs thereof, is not for business, PROVIDED
that the business is profitable. A non-profitable busniess may be
classified as a hobby. But as long as you turn up a profit, I think
that writing off business equipment is what the tax system is designed
for.

Are banks and GM hobbies?

Since GM is not an individual nor an S corporation, the hobby income
rule does not apply to it.

If GM was ran out of one person's garage, and was not profitable for
several years in a row, arguably it could be classified as a hobby.

http://www.irs.gov/newsroom/article/...169490,00.html

``The IRS presumes that an activity is carried on for profit if it
makes a profit during at least three of the last five tax years,
including the current year...''

i