Article Date:
March 2018

Word Count:



Tax Reform Puts Screws to Hobbies

In an article in Tax Notes titled “Potential Pitfalls for Direct Sellers,” author Monika Turek states that 15.2 million direct sellers fall into the tax-law-defined hobby category.1


Direct sellers include distributors for companies such as Amway, Herbalife, and Mary Kay. For sure, many of the 15.2 million are going to feel cheated by the recent tax reform.


At the other end of the spectrum, you find many hobby loss tax cases that involve doctors or lawyers who like racehorses or ranching. They too will feel cheated.


Under both prior law and the new law after the recent tax reform, your activity is either a business (for profit) or a hobby (not for profit). With the hobby classification, tax law makes you suffer.


Now, after the recent tax reform known as the Tax Cuts and Jobs Act (Pub. L 115-97), tax law makes the hobby people suffer far more than you can imagine.


To avoid the truly unimaginable, you need to prove that you engage in your activity to make a profit. ... Log in to view full article.

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