If a taxpayer can show that they earned a profit in three-out-of-five previous years, then expenses will never be considered hobby loss and losses from the activity can be deducted in excess of the gross income from the activity. a. True b. False

6. Investigation of a business unrelated to ones present business never results in a current-period deduction of the entire amount if the amount of the investigation expenses exceeds $5,000. a. True b. False

7. A bond held by an investor that is uncollectible will be treated as a worthless security and, hence, produce a capital loss.

a. True b. False

8. Janet works at Green Companys call center. If Janets compensation is based on the number of calls she handles, she is an independent contractor. a. True b. False