If you have a side business, there are things you should be doing to ensure that the business is not a hobby.
A ranching operation that lost millions is not a hobby, according to the Tax Court.
A man who ran the venture in addition to his day job as an economist is able to deduct the losses. In the Court’s view, he acted in a businesslike manner, despite not having a written business plan. His multiple ranch activities were integrated.
For example, the hay operation provided feed to cattle and horses, which were cared for by the on-premise veterinary center.
He hired a ranch manager and consulted experts. He also took steps to try to increase profit potential.
Welch, TC Memo. 2017-229