Wule irst three years. A trade or business is an activity carried on primarily to make a profit. Taxpayers are considered self-employed if they carry on a trade or business as an independent contractor or a sole proprietor. Mark for follow up Question 33 of 75. I an activity is not considered "engaged in for profit" because it does not meet the IRS presumption of profit, the Activity will automatically be considered a hobby with no other recourse for the taxpayer. Activity will automatically be considered "engaged in for profit" when three of nine profit factors are met. Facts and circumstances may still indicate that the taxpayer has a profit motive. Testing period and losses are suspended, since a taxpayer does need to continue efforts to further the interests of the business to be considered engaged in for profit