12/

Richard operates a hair styling boutique out of his home. The boutique occupies 420 of the home's 1,200 square feet of floor space. Other information is as follows:

Gross income from the boutique	$10,000
Supplies for the boutique	$2,400
Depreciation on total residence	$12,000
Utilities for total residence	$6,000

What amount of income or loss from the boutique should Richard show on his return?

a.$10,400 loss

b.$0 income or loss

c.$3,500 income

d.$1,300 income

e.None of these choices are correct.

14/

In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2020, he sells $7,500 worth of furniture and has $21,000 worth of marketing and equipment rental expenses. Which one of the following is true?

a.Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobby.

b.Fred cannot deduct any of the expenses because he is engaged in a hobby.

c.Fred may deduct all $21,000 of his expenses because Fred is engaged in a trade or business.

d.Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby.

e.None of these choices are correct.

15/

1. Linda is self-employed and spends $600 for business meals and $900 for business entertainment in the current year. What is Linda allowed to deduct in the current year for these expenses?

   a.$1,500

   b.$300

   c.$600

   d.$750

   e.None of these choices are correct.

18/

Taxpayers who make a combined business and pleasure trip:

a.Must allocate the travel cost between the business and pleasure parts of the trip if the travel is within the United States.

b.Can take a tax deduction only for the personal part of the trip.

c.Must allocate the travel cost between the business and pleasure parts of the trip if the travel is outside the United States.

d.Can deduct the cost of meals, lodging, local transportation, and incidental expenses in full.