Just because you have years of experience in an activity and have made an occasional profit at it doesn’t mean you have a profit motive, according to the Tax Court. And without a profit motive, you don’t get to deduct losses from the activity.
According to a recent Tax Court ruling in Stettner, T.C. Memo 2017-113, Allen Stettner and his wife Julie formed Al Stettner Racing in 2006. They reported net losses of $19,900 and $16,600 on Schedules C for 2006 and 2007. They stopped operating Al Stettner Racing in 2007 and did not report a car-racing activity for 2008 through 2009. In 2009 they filed a chapter 7 bankruptcy petition that they attributed in part to Al Stettner Racing’s losses.
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