It's not a hobby, it's a business.
Whatever YOU care to call it, if it doesn't meet the requirements of Section 701 its not "conclusively deemed to be engaged in for profit." and in mys estimation subject to audit and review.
Current IRS guidelines state:
"In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:
You carry on the activity in a business-like manner, The time and effort you put into the activity indicate you intend to make it profitable, You depend on income from the activity for your livelihood, Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business), You change your methods of operation in an attempt to improve profitability, You, or your advisors, have the knowledge needed to carry on the activity as a successful business, You were successful in making a profit in similar activities in the past, The activity makes a profit in some years and the amount of profit it makes, and You can expect to make a future profit from the appreciation of the assets used in the activity"
Clearly there will be similar guidelines to prevent shysters from skirting the law
Whatever YOU care to call it, if it doesn't meet the requirements of Section 701 its not "conclusively deemed to be engaged in for profit." and in mys estimation subject to audit and review.Why would Section 701 even apply to me? Must all businesses have "received gross payments for the sale of taxable property or services that exceed the sum of-- `(1) taxable property and services purchased; `(2) wages and salary paid; and `(3) taxes (of any type) paid, in 2 or more of the most recent 3 calendar years during which it operated when the business activity shall be conclusively deemed to be engaged in for profit" before they can claim the exemption? Sound like it would be tough for startups, which is all my business is.