Question

Alex, who is single, conducts an activity in 2020 that is appropriately classified as a hobby. The activity produces the following revenues and expenses:

Revenue $18,000 Property taxes 3,000 Materials and supplies 4,500 Utilities 2,000 Advertising 5,000 Insurance 750 Depreciation 4,000

Without regard to this activity, Alex's AGI is $42,000.

Determine the amount of income Alex must report and the amount of the expenses he is permitted to deduct. Assume Alex itemizes his deductions.

Reportable income: $
Deductible expenses: $

Answer 1

Reportable income income. Answer Determine the amount of income Alex must report of page: 01 the amount of the expenses he is permitted to deduet . portable income :- - Revenue learned from hobby = $18000 Therefore, entine $ 18000] earned should be reported as a part of the gooss dedutible expenses :- Also, none g the hobby expenses are deductible. However since deductions are itemized, are itemized, a deduction of $3000 paid for the property taxes is allowed regardless of the hobby altivity, deductible expenses property taxes $ 3000 Therefore, deduetible expenses are 3000) the