Home » Economy » Trump tax returns: IRS hobby rules put $1.1M of deductions at risk
Trump tax returns: IRS hobby rules put $1.1M of deductions at risk
Gaetz shakes up speakership contest by casting vote for Trump
Fox News congressional correspondent Chad Pergram brings the latest on Rep.-elect Kevin McCarthy’s speakership debacle and when the House can expect to move to an eighth vote.
Former President Donald Trump’s years of business losses are an IRS red flag, says one well-known tax expert.
Trump's federal tax returns show multiple aviation businesses claiming losses for three straight years, placing those activities at risk of being reclassified as not-for-profit activities or "hobbies" under IRS rules.
As more Americans enter the gig economy, understanding those rules can help self-employed taxpayers stay clear of the IRS by keeping track of yearly profits and losses and avoiding discretionary business purchases in years that would create losses that may trigger IRS hobby rules.
In Trump's case:
DJT Aerospace LLC broke even in 2016 and 2017 and reported losses in 2018-2020.
DT Endeavour I LLC and DJT Operations II LLC lost money between 2018-2020.
The IRS frowns on losing streaks. The service believes businesses should make a profitin at least three of every five years, including the current year (or at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses).
"If someone has a business, they operate the business to make a profit," the IRS said in a 2019 tax tip. "In contrast, people engage in a hobby for sport or recreation, not to make a profit."