Personal-Service Activity

AAA

DEFINITION of 'Personal-Service Activity'

Any business enterprise with the primary purpose of providing personal services. Personal-service activities encompass a wide range of professions, including law, medicine, engineering, design, finance, accounting and even performing arts. As the name implies, a personal-service activity focuses on directly providing a personalized service, such as legal advice or medical treatment, to an individual or group for compensation. Personal-service activities do not require the use of capital in order to generate material income.

INVESTOPEDIA EXPLAINS 'Personal-Service Activity'

The material participation test for personal-service activities determines whether or not a taxpayer is a material participant in a business. Taxpayers who meet test guidelines will most likely be able to deduct business losses.

RELATED TERMS
  1. Capital

    1) Financial assets or the financial value of assets, such as ...
  2. Service Sector

    The portion of the economy that produces intangible goods. According ...
  3. Material Participation Test

    A set of criteria that determines whether a taxpayer is a material ...
  4. Wrap Fee

    A comprehensive charge levied by an investment manager or investment ...
  5. Deduction

    Any item or expenditure subtracted from gross income to reduce ...
  6. Full-Service Broker

    A broker that provides a large variety of services to its clients, ...
RELATED FAQS
  1. How does additional paid in capital affect retained earnings?

    Both additional paid-in capital and retained earnings are entries under the shareholders' equity section of a company's balance ... Read Full Answer >>
  2. How can I find net margin by looking a company's financial statements?

    In finance and accounting, financial statements represent the fundamental means of analyzing a company's financial position, ... Read Full Answer >>
  3. What can working capital turnover ratios tell a trader?

    A company's working capital turnover ratio is traditionally positively correlated with business performance. A high, or better ... Read Full Answer >>
  4. What is a negative write-off?

    A negative write-off is a write-off conducted by a company or accountant after deciding not to pay back an individual or ... Read Full Answer >>
  5. What metrics can be used when evaluating a telecommunications company to ensure its ...

    Cash flow analysis has been transformed since the widespread introduction of statements of cash flow, and investors have ... Read Full Answer >>
  6. How do you record adjustments for accrued revenue?

    An accountant records adjustments for accrued revenues through debit and credit journal entries in defined accounting periods ... Read Full Answer >>
Related Articles
  1. Entrepreneurship

    Can You Handle A Home-Based Business?

    Find out if you have the traits to be a top entrepreneur.
  2. Entrepreneurship

    Should You Incorporate Your Business?

    Find out how becoming a corporation can protect and further your finances.
  3. Taxes

    Can You Deduct Your IRA Contributions?

    We help you answer this important question, which is determined by whether you are considered an "active participant".
  4. Options & Futures

    What You Get When You Pay For Investment Services

    There are three value components in investing. Can you save money by doing some of them yourself?
  5. Options & Futures

    Investment Services Stump Investors

    What you're getting isn't easy to determine. Find out how to get your money's worth.
  6. Fundamental Analysis

    Explaining the Common Size Income Statement

    A common size income statement expresses each account as a percentage of net sales.
  7. Professionals

    What Does an Auditor Do?

    An auditor ensures that organizations maintain accurate and honest financial records.
  8. Fundamental Analysis

    Calculating the Net Debt to EBITDA Ratio

    Financial analysts typically use the net debt to EBITDA ratio to determine a company’s ability to pay its debt.
  9. Economics

    How Does an Operating Lease Work?

    Operating lease is a term used mostly in accounting to denote a lease that gives the lessee rights to use and operate an asset without ownership.
  10. Economics

    Understanding Management by Objectives

    Management by objectives is a process in which a manager and an employee agree on specific performance goals and then develop a plan to reach those goals.

You May Also Like

Hot Definitions
  1. Nuncupative Will

    A verbal will that must have two witnesses and can only deal with the distribution of personal property. A nuncupative will ...
  2. OsMA

    An abbreviation for Oscillator - Moving Average. OsMA is used in technical analysis to represent the variance between an ...
  3. Investopedia

    One of the best-known sources of financial information on the internet. Investopedia is a resource for investors, consumers ...
  4. Unfair Claims Practice

    The improper avoidance of a claim by an insurer or an attempt to reduce the size of the claim. By engaging in unfair claims ...
  5. Killer Bees

    An individual or firm that helps a company fend off a takeover attempt. A killer bee uses defensive strategies to keep an ...
  6. Sin Tax

    A state-sponsored tax that is added to products or services that are seen as vices, such as alcohol, tobacco and gambling. ...
Trading Center
×

You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!