As a hobby, Jane creates and sells oil paintings. During the current year, her sales total $8,000.
Question:
As a hobby, Jane creates and sells oil paintings. During the current year, her sales total $8,000. How is the tax treatment of her hobby different from the treatment of a trade or business, if
a. Her business expenses total $5,600?
b. Her business expenses total $10,000?
c. Assume that Jane itemizes her deductions and that she has an adjusted gross income of $42,000 before considering the effect of the hobby. Discuss the actual amount of the deduction Jane would receive in parts a and b.
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a Because Janes activity is a hobby her sales must be reported as gross income and her expenses are ...View the full answer
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Related Book For 
Concepts In Federal Taxation
ISBN: 9780324379556
19th Edition
Authors: Kevin E. Murphy, Mark Higgins, Tonya K. Flesher
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