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13 Aug 2018

Matt is single andhas salary from his job as a sports announcer in the amount of$100,000.

He has charitablecontributions in the amount of $1,000.

Matt also has thefollowing income and 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

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

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

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Reid WolffLv2

15 Aug 2018

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Related questions

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.

Matt is single, age 25 and has salary from his job as a sports announcer in the amount of $50,000. Matt also has the following income and expenses related to an activity:

Income- $23,000

Mortgage interest- from his home office- $8,000

Property taxes- from his home office- $2,000

Depreciation- $5,000

Supplies and fees- $8,000

Telephone- $2,000

1. Briefly define an activity classified as a hobby vs. a business?

2. List 4 factors might be used to assist a taxpayer in determining whether an activity is a hobby or a business?

3. If a hobby, answer the following questions:

a. Are hobby expenses deductions FOR AGI or FROM AGI?

b. What form/schedule and line is hobby income reported on?

c. What form/schedule and line are hobby expenses reported on?

d. Calculate Matt's AGI.

e. What is the rule regarding how hobby expenses are deducted, including the ordering of expenses and all limitations?

f. Apply the rule in (e) above and prepare a detailed schedule of your calculation of deductible hobby expenses are calculated.

4. If a business, answer the following questions:

a. Are business expense deductions FOR AGI or FROM AGI?

b. What form/schedule is business income reported on?

c. What form/schedule are business expenses reported on?

d. Prepare a tax return for Matt, assuming he uses the standard deduction and has no dependents.

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John is single. age 26 and has salary from his job as a sports journalist in the amount of $50000. He also has the following income and expenses related to an activity:

Income $23000

Mortgage Interest (from his home office) $8000

Property Taxes (from his home office) $2000

Depreciation $5000

Supplies and taxes $8000

Telephone $2000

a. Calculate John's AGI

b. What is the rule regarding how hobby expenses are deducted, including ordering of expenses and all limitations?

c. Apply the rule in (b) above and provide a detailed schedule of your calculation of deductible hobby expenses are calculated