Tess Has Started a New Part-Time Business

question 38

True/False

Tess has started a new part-time business.She is concerned that the IRS will call it a hobby if her return is audited.This first year of business showed a small profit,and she expects it to continue to show modest profits.She would like to take advantage of the three out of five year profit rule to shift the burden of proof to the IRS.Because of the three-year statute of limitations,this will not be possible for the first year of business.

---

Definitions:

Visible to Others

The concept or state of being able to be seen or perceived by others, often used in contexts related to privacy, social presence, or online visibility.

Irreversibility

A stage in cognitive development where a child believes that actions cannot be undone or returned to their original state.

Precausal Thinking

A cognitive process observed in young children where reasoning is not based on logical causality, but on intuition or superficial associations.

Egocentrism

The cognitive inability to understand that other people's views and perspectives are different from one's own.