New gig workers with early-year losses defend deductibility by satisfying §183 profit-motive factors — 9-factor test.
IRC §183 disallows losses from activities not engaged in for profit. Safe harbor: profitable in 3 of 5 consecutive years (2 of 7 for horses). For new gig / creator / consultant activities in loss years, satisfy the Reg §1.183-2 nine-factor test: (1) businesslike manner, (2) expertise, (3) time/effort, (4) profit expectation from asset appreciation, (5) success in similar activities, (6) history of income/loss, (7) occasional profits, (8) financial status, (9) personal pleasure. Document EVERYTHING — separate business bank account, marketing spend, business plan.
Click Generate advisory deep dive for mechanics, IRC citations, a step-by-step execution plan, a worked numeric example on your profile, costs, risks, and this-week actions.
Full-time gig drivers set up Solo 401(k) — defer $23K + 25% profit-share, potentially $50K+/yr into retirement tax-deferred.
Rideshare/delivery drivers compare 67¢/mi standard vs actual (gas+depreciation+insurance) — pick larger each year.
1099/Schedule C gig income qualifies for 20% Qualified Business Income deduction below the SSTB phase-out.
Freelancer with S-corp deducts home office via accountable plan + rents home to S-corp 14 days/yr for meetings — double dip.