Hobby Loss Case
Jul 03, 2007OUTCOME: Won; avoided audit increase of taxes.
IRS alleged my clients were not engaged in a business with the intention of making a profit. This meant that under the Hobby Loss Rule, the IRS was alleging that my clients were trying to turn persona ... l expenses into tax-deductible expenses. Special Trial Judge Goldberg of the U.S. Tax Court ruled that we had proven that my clients had an intention to make a profit and had not violated the Hobby Loss Rule. He refused to allow the IRS to tack on additional taxes, penalties, and interest. We won a complete victory after a trial to the Judge.
