I know someone who is an accountant for very wealthy people and quite a few seem to have useless children whose failing businesses they bankroll.
reply> whose failing businesses they bankroll
replyDon't confuse a hobby business with a failing business.
Plenty of people with independent means run loss making businesses for fun and/or support wives/children doing just that.
Semantics. If the hobby business never makes a profit and is capturing losses for tax benefits, that’s a failing business. It can be failing indefinitely as long as there’s money to support it, but you can’t call it a successful business.
replyDoesn't running consistent losses eventually cause tax issues with the IRS?
If the losses are offsetting profit elsewhere, I would assume the IRS would become very interested in challenging the validity of the hobby business?
replyYou appear to be suggesting that fun hobbies which don't make money are a 'failure' rather than a success. Not everything is judged by how much money it makes.
replyHave you ever wondered why kids climb trees?
It's really not that deep: they're characterising the business, you're characterising the hobby. The owner having a good time doesn't make it a successful business. A failing business can be a successful hobby, sure, that's still a failing business.
replyYou see a lot of hobby shops in ultra-wealthy areas of major metropolises. Tiny art studios, interior decorators with a handful of items in stock, boutique fashion shops.
replyStartups are like sports cars nowadays. People think it makes you look cool if you own one.
replyIt doesn't matter if it costs a lot of money to maintain. Yachts and sports cars do the same. That's actually like the whole point of it, after all.