united-states business irs
Is it possible for a no-sales clinical or pre-clinical stage or prototype stage biotech. company to meet the IRS definition of &quot;trade or business?&quot;
<p>Is it possible for a no-sales clinical/pre-clinical/prototype stage biotechnology company to have any activity carried on &quot;for the production of income from....?&quot;</p>
<p>IRS says:</p>
<blockquote>
<p>&quot;The term trade or business generally includes any activity carried on
for the production of income from selling goods or performing
services. It is not limited to integrated aggregates of assets,
activities, and goodwill that comprise businesses for purposes of
certain other provisions of the Internal Revenue Code. Activities of
producing or distributing goods or performing services from which
gross income is derived do not lose their identity as trades or
businesses merely because they are carried on within a larger
framework of other activities that may, or may not, be related to the
organization's exempt purposes.&quot;</p>
</blockquote>

<blockquote>
<p>Is it possible for a no-sales clinical or pre-clinical stage or
prototype stage biotech. company to meet the IRS definition of &quot;trade
or business?&quot;</p>
</blockquote>
<p>Yes.</p>
<p>Any economic activity carried on with the hope that it will eventually give rise to a profit is a trade or business, subject to a limitation associated with the &quot;hobby loss rule&quot; which ordinarily wouldn't be applicable to such a company. Economic activity includes getting investment resources and spending money in furtherance of the long term profit goal.</p>
