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9 Apr 2018

TAX QUESTION

Bob is single and has salary fromhis job as a sports announcer in the amount of $100,000.

He has charitable contributions inthe amount of $1,000.

Bob also has the following incomeand expenses related to an activity:

Income

$20,000

Mortgage interest

5,000

Property taxes

5,000

Depreciation

4,000

Supplies and fees

7,000

Telephone

3,000

1.Briefly define an activityclassified as a hobby vs. a business?

2.List 4 factors might be used toassist a taxpayer in determining whether an activity is a hobby ora business?

Using the tax formula, beginning with Gross Income, calculateBob's taxable income if the activity is considered a hobby.

Are hobby expenses deductions FOR AGI or FROM AGI?

What form/schedule is hobby income reported on?

What form/schedule are hobby expenses reported on?

Using the tax formula, beginning with Gross Income, calculateBob's taxable income if the activity is considered a business.

Are business expense deductions FOR AGI orFROM AGI?

What form/schedule is business income reported on?

What form/schedule are business expenses reported on?

Your answers to questions 3 and 4above must include your calculation and a brief explanation of anyapplicable rules, limitations, etc. Also incorporate your answerson the tax forms as well.

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Nelly Stracke
Nelly StrackeLv2
9 Apr 2018

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