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Jamari Peters (Social Security number 123-45-6789) conducts a business with the following results in 2018: Revenue $20,000 Depreciation on car 3,960 Operating expenses of car
- Jamari Peters (Social Security number 123-45-6789) conducts a business with the following results in 2018:
Revenue | $20,000 |
Depreciation on car | 3,960 |
Operating expenses of car | 3,100 |
Rent | 6,000 |
Wages | 8,200 |
Amortization of intangibles | 680 |
Jamari estimates that due to a depressed real estate market, the value of land owned by the business declined by $5,200.
- Calculate the effect of Jamaris business on his AGI.
- How would your answer in part (a) change if the activity was a hobby?
- Alex, who is single, conducts an activity in 2018 that is appropriately classified as a hobby. The activity produces the following revenues and expenses:
Revenue | $18,000 |
Property taxes | 3,000 |
Materials and supplies | 4,500 |
Utilities | 2,000 |
Advertising | 5,000 |
Insurance | 750 |
Depreciation | 4,000 |
Without regard to this activity, Alexs AGI is $42,000. Determine the amount of income Alex must report and the amount of the expenses he is permitted to deduct.
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