Profit Motive

Profit Motive
The intent to achieve monetary gain in a transaction or material endeavor. Profit motive can also be construed as the underlying reason why a taxpayer or company participates in business activities of any kind. Profit motive must be determined for some transactions to determine the deductibility of any expenses involved.

For taxpayers who participate in rental activities, profit motive must be determined in order to claim rental expenses. The IRS may try to prevent a taxpayer from claiming rental losses if a profit motive cannot be proved. Profit motive can be established by proving that a profit was realized in at least three out of the last five years. Profit motive is also what separates a hobby from a business in the eyes of the IRS; hobby losses are nondeductible because there was no intent to make a profit from any gains.

Investment dictionary. . 2012.

Look at other dictionaries:

  • profit motive — ˈprofit ˌmotive noun [singular] ECONOMICS the desire to make money, which makes people want to be involved in a business activity: • People believe that the profit motive is behind the recent decline in standards of nursing care. * * * profit… …   Financial and business terms

  • Profit motive — For maximization and minimization in the mathematical sense, see optimization (mathematics). The profit motive is the concept in economics that refers to individuals being provided incentive to relinquish some of their spending power (i.e.… …   Wikipedia

  • profit motive — the desire for profit that motivates one to engage in business ventures. [1930 35] * * * profit motive, the expectation or goal of making profit as an incentive for investing in or starting a business: »The students…refer to the profit motive as… …   Useful english dictionary

  • profit motive — the desire for profit that motivates one to engage in business ventures. [1930 35] * * * …   Universalium

  • Profit (economics) — In economics, the term profit has two related but distinct meanings. Normal profit represents the total opportunity costs (both explicit and implicit) of a venture to an entrepreneur or investor, whilst economic profit (also abnormal, pure,… …   Wikipedia

  • motive — n. 1) to establish, find a motive 2) to question smb. s motives 3) altruistic; base; honorable; humane; noble; selfish; ulterior motives; the highest motives (to have nothing but the highest motives) 4) the profit motive 5) an underlying motive… …   Combinatory dictionary

  • profit — noun ADJECTIVE ▪ big, considerable, decent, enormous, fat, good, greater, handsome, healthy, hefty, high …   Collocations dictionary

  • profit — [[t]prɒ̱fɪt[/t]] ♦♦ profits, profiting, profited 1) N VAR A profit is an amount of money that you gain when you are paid more for something than it cost you to make, get, or do it. The bank made pre tax profits of ₤3.5 million... You can improve… …   English dictionary

  • motive, motif, incentive — A motive is a desire, need, or emotion that prompts or causes a person to act in a certain way; it is an inner urge that produces an act, but it also applies to the result of action: Jeb s motive was to get even with those who had not helped him …   Dictionary of problem words and expressions

  • motive — noun ADJECTIVE ▪ hidden, ulterior ▪ good, strong ▪ I d say he had a very strong motive for wanting her dead. ▪ altruistic, high …   Collocations dictionary