What is the Profit motive test?
Profit motive test means the IRS facts-and-circumstances review used to decide whether an activity is carried on as a real business or as a not-for-profit hobby. It weighs businesslike operations, time and effort, reliance on income, loss history, expertise, operational changes after losses, prior success, profit years, and asset appreciation. For individuals, the test decides whether Schedule C losses can offset wages or other business income. Clean records on Vehicle expenses, mileage, customer activity, and pricing changes support the business position before filing.
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