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David M. Kaufmann, CPA
7200 S. Alton Way,
Suite B-195
Centennial, CO 80112
Voice: 720.493.4804
(toll-free) 800.326.6686
Fax: 303.796.7768
(toll-free) 888.326.6686
Email:
contact2@kaufmann-cpa.com |
Facts:
You love coaching your kids baseball teams, and you have
decided to make an instructional video about pitching.
Your first year's sales are a disappointment, and this
activity has lost money.
The IRS decides to audit the return.
Problem:
Generally, if you can prove that you have a profit motive,
the losses are deductible.
If your business is profitable for 3 out of 5 years, it is
assumed that you do have a profit motive.
How do you prove a profit motive?
Solution:
Solution A
Before you start your business, discuss it with me.
I can give you a list of things to do that the IRS has indicated shows a
tendency to have a profit motive. Setting up the business properly from the
start can make all the difference in the world.
Solution B
Have me prepare the proper paperwork that you will go
along with the 3 out of 5 year rule.
Solution C
I can represent you a the IRS audit. The chances of
success improve if you followed the list of steps I gave you before you
started your business [Solution A].
Warning
You have to prove that you had a profit motive. The IRS
does not have to prove that you didn't have a profit motive. |