Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses:
Sales $ 5,000
Depreciation on greenhouse 10,000
Fertilizer, soil, pots 1,500
- What are the factors that the IRS will consider when evaluating whether the activity is a business or a hobby?
- If the activity is deemed to be a regular business, what is the amount of Lew's loss from the activity?
- If the activity is deemed to be a hobby, what is the amount of Lew's expenses (if any) from the activity that may be deducted?
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$_____________
$_____________
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Income Tax Fundamentals 2020
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- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT