Show Biz Activities for a Retiree Were a Business

Is acting a hobby or a business? After retiring as national sales executive for Mary Kay, a taxpayer (the mother of Robin Wright) began acting. She spent 35 to 45 hours per week researching, applying, and auditioning for roles. She studied and trained to enhance her skills and maintained subscriptions to various casting services. She sustained losses in the years under audit, which the IRS disallowed on the grounds that her acting was just a hobby and not a business. However, the Tax Court said that taken together, these actions indicated she carried on her affairs in a businesslike manner, with substantial investment of time and effort, and that her activities in the years being audited increased her acting opportunities in later years (she was able to get serious credits in these years). It was a business for which losses were deductible. #IdeaoftheDay