Question 22

For the years 2016 through 2020 (inclusive) Mary, a best-selling author, has been involved in operating an antique store. In 2016, 2017 and 2018 her revenue exceeded the expenses from the activity. In 2019 and 2020, the antique store generated a loss. Which statement is correct?

The activity is presumed to be a business. However, the IRS may prove it is a hobby.

The activity is a hobby. Mary cannot prove it is a business.

The activity is a business. The IRS cannot prove it is a hobby.

The activity is presumed to be a hobby. However, Mary may prove it is a business.