Music venue was a labor of love

Business owners can generally deduct business losses on their tax returns, but if the related activity is deemed a hobby, the deduction is limited. To qualify as a bona fide business, a profit motive must be shown, demonstrated by operating in a businesslike manner. One music enthusiast ran a performance venue, which incurred losses year after year, yet she made no effort to improve her business operations. That led the U.S. Tax Court to conclude the venue was a hobby, not a business. Her losses were disallowed. (TC Memo 2018-8)