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.
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.
