Answered step by step
Verified Expert Solution
Question
1 Approved Answer
opened a repair garage to fix cars owned by his neighbors. He rented space and purchased equipmer tools. Although he did generate revenues, Alex experienced
opened a repair garage to fix cars owned by his neighbors. He rented space and purchased equipmer tools. Although he did generate revenues, Alex experienced a loss during each of the first two years of rations. His expenses have exceeded his revenue and he has been using his personal credit cards to pa ills. Which of the following statements is true? Alex is not subject to hobby loss rules if his business is incorporated as an 5 corporation Because no profits have been made, Alex cannot immediately utilize the losses but must carry them forward indefinitely to reduce future profits from the same venture. Alex must make a profit in each of the next three years or he may need to treat this activity as a hobby. Even if this business is judged to be a hobby, losses are still deductible because the garage does generate revenues
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started