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Tax years, information returns and hobby losses

SEE 2 Chapter 2 · IRS outline 1A9, 1A10, 1A11

The bakery asks for a June year end because summer is slow. Daniel has paid a subcontractor $4,000 and has no idea what form he owes. And Mira's husband, who breeds show rabbits, wants to deduct his losses. Theo finds these questions sound small until he sees the penalties attached. By the end of this chapter, he can answer all three without calling Nadia.

In this chapter

1. Choosing a tax year: who gets to pick
2. Getting out of the required year: business purpose, section 444 and Form 1128
3. Employee paperwork: W-4, W-2 and W-3
4. The 1099 family and Form W-9
5. Hobby or business: the for-profit test
6. Loss limits at a glance

This chapter has 6 lessons and 51 practice MCQs with explanations, plus flashcards and a recall sheet.

What this chapter covers

• Required tax years
• section 444 and Form 1128
• Forms W-2, W-4, W-9 and the 1099 series
• hobby versus business
• the 3-of-5 presumption

Chapter 1: Choosing the entity: sole proprietors to exempt groups · Chapter 3: Forming a partnership