What is a trade or business for the excess business loss limitation?

An activity qualifies as a trade or business if your primary purpose for engaging in the activity is for income or profit and you are involved in the activity with continuity and regularity.

You do not need to actually make a profit to be in a trade or business as long as you have a profit motive. However, you do need to make ongoing efforts to further the interests of your business.

Note: If you own an interest in a partnership or S corporation, the trade or business determination is made at that entity's level.