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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Tax Preparer

Date & Time
  • event Date

    Thursday, January 21, 2021

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    110 minutes

Credit Information

  • BARBRI is a NASBA CPE sponsor and this 110-minute webinar is accredited for 2.0 CPE credits.

  • BARBRI is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).

$197.00
CPE
ALL

This course will discuss positioning businesses to satisfy the nine-factor criteria under Reg Sec 1.183-2(b) to avoid classification as a hobby. Our panel will discuss how the courts have historically interpreted and weighed these factors so tax professionals can identify potential hobby loss exposure and challenge a hobby loss classification if audited.

Faculty

Kreig D. Mitchell
Attorney/Managing Director
Mitchell Tax Law

Mr. Mitchell focuses on various state and federal tax matters and related business and probate matters, including tax procedural issues, questions about tax attributes, timing, character, and penalties and interest; structuring business and real estate transactions, including buying, selling, leasing, and other transfers and dispositions; tax planning for corporate and flow through entities; partnership tax issues, including partnership agreements and allocations; research tax credit issues, including qualification and funded research analysis. Previously, he worked for the IRS as an attorney and then an appeals officer. He’s led a tax controversy team for a boutique consulting firm, worked in the tax departments for two Fortune 500 companies, and worked for one of the Big Four accounting firms.

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S. Gray Edmondson
Partner
Edmondson Sage Allen, PLLC

Mr. Edmondson practices in partnership, corporate, and individual tax planning; business transactions including mergers and acquisitions; business planning; tax controversy; estate and wealth transfer planning; probate; estate and trust litigation; asset protection; and charitable planning. He has conducted, authored, and directed numerous seminars for professional, academic, and civic groups on taxation, business, asset protection and estate planning. Mr. Edmondson works closely with clients to develop and implement such strategies.

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Peter J. Reilly
Consultant
Miscellaneous

Mr. Reilly began working in public accounting in 1979 with Joseph B Cohan & Associates, a large local firm based in Worcester Mass. He was one of the founding partners of CCR, a New England regional firm that ran from 1997 till 2011, when its practice was sold to Grant Thornton. After a brief tenure at Grant Thornton, Mr. Reilly worked in a boutique practice until retiring from active practice in 2018. He now focuses on writing and consulting. Mr. Reilly has been a contributor to Forbes.com since 2011 and has had his own platform, now called Your Tax Matters Partner, since 2009. He covers a wide range of federal and state income tax issues.

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Description

More businesses are reporting losses in the current economy. Businesses anticipating losses should take steps to ensure their losses will be allowed and not considered "activities not engaged in for profit" under IRC Section 183. Courts have established winners, losers, and precedents that help define when activities are conducted in a business-like manner (factor #1) and qualify as business activities.

There is a statutory safe harbor, Section 183(d), that presumes a profit motive if the activity is profitable for three of five years (two of seven for certain activities involving horses). However, meeting the safe harbor does not eliminate a hobby loss challenge, it simply shifts the burden of proof to the IRS. Tax advisers need to understand the criteria the IRS uses to assess whether an undertaking is an activity engaged in for a profit so that losses from struggling businesses are allowed.

Listen as our panel of tax experts discusses the latest hobby loss developments, including recent court cases and positioning business activities to survive IRS challenges to loss deductions.

Outline

  1. Hobby losses: an overview
  2. The nine factors
  3. Meeting the safe harbor
  4. IRS hobby loss audits and appeals
  5. Proactive planning for losses
  6. Recent and landmark cases

Benefits

The panel will review these and other key issues:

  • Preventing a business from being classified as a hobby
  • Demonstrating a profit motive
  • Completing, and when to complete, Form 5213 to postpone safe harbor determination
  • Meeting the nine factors outlined in Regulation Section 1.183-2(b)
  • Lessons learned from recent hobby loss cases

NASBA Details

Learning Objectives

After completing this course, you will be able to:

  • Identify critical factors in the hobby loss determination
  • Determine specific steps businesses can take to help prove a profit motive
  • Decide when filing Form 5213 may be beneficial
  • Ascertain certain businesses that may appear to be hobbies

  • Field of Study: Taxes
  • Level of Knowledge: Intermediate
  • Advance Preparation: None
  • Teaching Method: Seminar/Lecture
  • Delivery Method: Group-Internet (via computer)
  • Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
  • Prerequisite: Three years+ business or public firm experience preparing complex tax forms and schedules, supervising other preparers or accountants. Specific knowledge and understanding of individual income taxation, including itemized deductions, individual income tax credits, net operating loss limitations including carrybacks and carryforwards.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).