# Enrolled Agent Exam [Part 2] 04, Hobby vs Business — Activity for Profit Test

Page: https://stenobird.com/podcast/finance-exam-prep-7658413/enrolled-agent-exam-part-2-04-hobby-vs-business-activity-for-profit-test
Text version: https://stenobird.com/podcast/finance-exam-prep-7658413/enrolled-agent-exam-part-2-04-hobby-vs-business-activity-for-profit-test.md
Podcast: [Finance Exam Prep](https://stenobird.com/podcast/finance-exam-prep-7658413)
Published: 2026-05-01T22:41:20+00:00
Episode link: https://open-exam-prep.com/
Audio file: https://episodes.captivate.fm/episode/91309ac8-1b58-4dca-b0b2-015225b1dcd5.mp3
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Duration seconds: 182

## Resource

This podcast is made by Ran Chen, who holds an EA license, Insurance and Securities licenses (Series 6, 63, 65), and the CFP® designation. He is passionate about opening access to high-quality exam preparation resources and helping learners prepare more effectively for professional certification exams. In this episode you will learn: - The IRS uses a nine-factor test under §183 to determine if an activity is a business or a hobby. - An activity is presumed to be for-profit if it shows a profit in at least 3 of the last 5 consecutive years. - The profit motive presumption for horse-related activities is 2 profitable years out of the last 7 years. - Hobby income is reported on Schedule 1, but related expenses are non-deductible for individuals through 2025 due to TCJA. - Meeting the profit presumption shifts the burden of proof to the IRS but does not guarantee business classification. For more free exam prep tools, practice questions, and AI-powered explanations, visit https://open-exam-prep.com/ or YouTube Channel: https://www.youtube.com/@Open-exam-prep

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## Transcript

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