Question
Hobby Losses. Chuck, a dentist, raises prize rabbits for breeding and showing purposes. Assume that the activity is determined to be a hobby. During 2019,
Hobby Losses. Chuck, a dentist, raises prize rabbits for breeding and showing purposes. Assume that the activity is determined to be a hobby. During 2019, 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)
- What is the total amount of income and deductions Chuck should report for 2019 with respect to the rabbit raising activities?
- Identify which expenses may be deducted and indicate whether they are deductions for or from AGI.
- By what amount is the cost basis of the rabbit hutches to be reduced for the year?
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