TN 12 (09-90)

A. POLICY - GENERAL

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,

• regular occupation,

• 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.

B. POLICY — OTHER FACTORS

1. Personal Services

The fact that an individual derives his/her income from a trade or business is controlling — not the nature or extent of the services.

2. Seasonal

Although length of time is usually an important factor, certain activities are seasonal, e.g. selling ice cream during the summer months.

3. Illegality

An illegal activity may constitute a trade or business. Individuals engaged in such activities are required to report their income and pay SE taxes.

4. Multiple Enterprises

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”.

5. Hobbies

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.