Meet the 3-of-5 profit test OR the 9-factor test to keep deducting losses from a side venture against W-2.
IRC §183 disallows losses from activities not engaged in for profit ('hobbies'). Safe harbor: profitable in 3 of 5 consecutive years (2 of 7 for horse activities) creates a rebuttable presumption of profit motive. Fail safe harbor? Fight on the 9 factors (Treas. Reg. §1.183-2): businesslike manner, expertise, time/effort, appreciation, prior success, history, occasional profits, financial status, personal pleasure. Winning = deduct losses against W-2/other income. Losing post-TCJA = zero deduction. Documentation matters more than the venture.
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Multiply the $10M §1202 exclusion across multiple trusts.
4% corporate tax + 0% capital gains for bona fide residents.
Stack the $500K primary-home exclusion on top of a 1031 deferral.
Convert Traditional to Roth during sabbaticals or business-loss years.
Capitalize property taxes and interest on undeveloped land.
Deduct now, control forever, employ heirs.
Ordinary loss (not capital loss) on failed small biz — up to $100K.
Buy leveraged real estate inside your IRA — tax-deferred or tax-free.