1) Indicate whether the following expenditures are trade or business deductions (T), production of income deductions (PI), personal deductions (P), or are not deductible (X). Also indicate if the deductible expenditures are deductible "for" or "from" AGL

a. Interest expense on business loan

b. Expenses incurred in an activity lacking a true profit motive (i.e., a hobby activity)

c. Commuting expenses of individual taxpayer

d. Rent payments paid by an illegal gambling business

e. Payment to bribe government official made by a business

2) Are any of the following losses deductible on an individuals income tax return? If so, is the loss deductible for or from AGI? Explain each loss.

Loss Amount

1) Loss on sale of stock in an individuals wholly owned

Business corporation 4,000

2) Hobby loss in excess of hobby gross income 3,000

3) Gambling losses in excess of gambling income 8,000

4) Loss on sale of stock in individuals invest. Port. 9,000

5) Decline in value of stock held in individuals

Investment portfolio 7,000

6) Loss on sale of personal automobile 2,000

TOTAL 33,000