Ask a tax advisor on the topic of Profit and loss statement

Hobby

February 9, 2010 | 20,00 EUR | answered by Dipl.BW/SB Ulrich Stiller

Tax return 2008:
I have registered a side business in web design and since its establishment in 2001, I have made the following profits/losses:
2001: -1020,-
2002: +475,-
2003: +2448,-
2004: +3264,-
2005: -1552,-
2006: -2912,-
2007: -1879,-

Can I claim losses again in 2008, or do I have to expect the classification of the business as a hobby?

Thank you!

Dipl.BW/SB Ulrich Stiller

Dear Seeker,

Thank you for your inquiry, which I would like to answer based on your information and in the context of your efforts in a preliminary consultation as follows:

For a business operation, the initial presumption always speaks in favor of profit-making intention and against hobbyism, as the Federal Fiscal Court ruled on 20.09.2007 (BFH/NV 2008 p.532). Longer periods of losses alone are not sufficient to assume hobbyism. Furthermore, you have made profits in the years 2002-2004, so it cannot be said that there have been long periods of losses since the opening of the business in 2001. Therefore, also determine your profit or loss for 2008 through the appropriate profit determination, enter this amount in annex G to the income tax return 2008, and submit the tax return to the tax office. If the tax office concludes that there is hobbyism, then action must be taken and an objection must be lodged against the income tax assessment.

I hope my explanations have been helpful to you.

Best regards,

Ulrich Stiller
Tax consultant