What determines that an activity is a "trade or business"?

Article Abstract:

A clear definition of what constitutes a 'trade or business' is needed in order to ascertain the tax responsibilities attached to particular activities. Based on a study of judicial and statutory rulings and case law, an activity is trade- or business-related if the taxpayer takes part in the enterprise for profit reasons. Moreover, if the taxpayer receives a share in the profits and losses from the activity other than as an ordinary investor, that activity is considered a trade or business operation. Lastly, the activity should be regular, continuing and significant in order to qualify as a business or trade. These characteristics delineate business or trade activities from those of hobbyists, investors and taxpayers with passive activity losses.

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Does recent decision defining trade or business extend beyond the full-time gambler?

Article Abstract:

The Supreme Court rejected the goods-and-services test in ruling in the Groetzinger case that a gambler is engaged in a business or trade. The Supreme Court in Groetzinger and the Tax Court in the Beals case did not allow the Groetzinger ruling to be expanded to include other areas. The Tax Court in Beals reverted to the reasoning shown in the Higgins case to deny investors status as a full-time trade or business. It is not yet clear what the ramifications are of the rejection of the goods and services test, but some taxpayers may gain from newly available deductions.

Gambling

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Accounting policy choice: the relationship between corporate tax burdens and company size

Article Abstract:

Data compiled by the UK's non-financial firms that estimates corporate tax burdens or Effective Tax Rates (ETR) from 1968-1993 are analyzed to find out if firm size affects corporate tax burden. Results show that from the period 1968-1979, size effect is evident, particularly in mineral extractive firms. In the proceeding periods, however, size effect diminished leading to a negative association between ETR and effective tax rates in the 1970s and 1980s.

Public Finance Activities, Tax Rates, Analysis, Economic aspects, Corporate size

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