Making Movies
A layer spent six years making a documentary film on the musical group Up With People, her husband having been a part of the group in the past. She wanted to deduct the losses, but the IRS argued that the losses indicated that her project qualified as a hobby. They even supported their claim by pointing out that since her husband was once a member of the group, the documentary could be considered a high-cost home movie.
A judge eventually said that when it comes to documentary film making, their nature is not-for-rofit, though a number of well-known filmmakers disagreed, stating that one can absolutely make money with documentaries.
However, since she acted in a businesslike manner by buying insurance, consulting experts, hiring bookkeepers and even changed the story-line in order to make the movie more marketable, the Tax Court ruled in her favor. She even took it to movie festivals and blogged about it! Of course it should be considered a business!
