TN 12 (09-90)
Consider the following in determining the existence of a trade or business:
the good faith intention of making a profit or producing income,
continuity of operations, repetition of transactions, or regularity of activities,
holding out to others as being engaged in the selling of goods or services.
NOTE: A single factor is not sufficient upon which to determine the existence of a trade
or business. All the factors need not apply.
The fact that an individual derives his/her income from a trade or business is controlling
— not the nature or extent of the services.
Although length of time is usually an important factor, certain activities are seasonal,
e.g. selling ice cream during the summer months.
An illegal activity may constitute a trade or business. Individuals engaged in such
activities are required to report their income and pay SE taxes.
An individual may have more than one trade or business . On the other hand, an individual
may have more than one business enterprise, but one or more may be excluded from the
definition of “trade or business”.
The buying and selling involved with a hobby is generally done for the purpose of
improving or otherwise furthering the hobby. In these cases,the activities do not
constitute a trade or business.