Chuck, a dentist, raises prize rabbits for breeding and showing purposes. Assume that the activity is determined

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Chuck, a dentist, raises prize rabbits for breeding and showing purposes. Assume that the activity is determined to be a hobby. During the year the activity generates the following items of income and expense:

Item Amount

Sale of rabbits for breeding stock ……………..$800

Prizes and awards ……………………………………….300

Property taxes on rabbit hutches ………………..200

Feed …………………………………………………………….600

Veterinary fees …………………………………………….500

Depreciation on rabbit hutches …………………..250

a. What is the total amount of deductions Chuck may take during the year with respect to the rabbit raising activities?
b. Identify which expenses may be deducted and indicate whether they are deductions for or from AGI.
c. By what amount is the cost basis of the rabbit hutches to be reduced for the year?

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a Since this activity is a hobby Chuck can potentially deduct a total of 1100 of the expenses relate...View the full answer

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Federal Taxation 2018 Comprehensive

ISBN: 9780134532387

31st Edition

Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson

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Question Posted: Mar 20, 2018 03:02 AM

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Chuck, a dentist, raises prize rabbits for breeding and showing purposes. Assume that the activity is determined

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a Since this activity is a hobby Chuck can potentially deduct a total of 1100 of the expenses relate...View the full answer

Federal Taxation 2018 Comprehensive

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