Question

Albert resigned from his full-time accounting job to sell his sculptures in 2018. He has had a loss for the first two years in his new career. What is the primary factor for determining if this is a business and not a hobby?

Interest in creating art.

Intent to generate a profit.

Intent to incur expenses.

Intent to derive pleasure and success.

Answer 1

Solution:

B) Intent generate a profit.

The ultimate aim of every business is to earn profit or maximise profit.In this case Albert is facing loss since the last 2 years. Profit or loss directly related with business.

Rest of the options are wrong. Because they were related with hobbies or passion of a person.But here the statement is mentioned or asking about business.Profit maximisation is the only factor comes under business( Based on the above statement).