Why the IRS reclassifies fake businesses as hobbies

Name: Why the IRS reclassifies fake businesses as hobbies
Duration: 59 s
Description: If you start a business just to create paper losses, the IRS can call it a hobby and make you repay years of deductions plus penalties.

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Starting a side business just to rack up losses and offset your W-2 income? The IRS has seen that move before. TJ explains how auditors reclassify these setups as hobbies, what that means for years of deductions you already claimed, and the penalties that follow.

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