Which of the following doesnotgive rise to a business expense for self-employed taxpayer's uniforms or special clothing?

a.A lawyer buys a business suit.

b.A scientist buys his hazmat suit.

c.A mascot buys his costume.

d.A clown buys his costume.

e.All of these choices are deductible.

Ellen loans Nicole $45,000 to start a hair salon. Unfortunately, the business fails in 2020 and she is unable to pay back Ellen. In 2020, Ellen also had $20,000 of income from her part-time job and $15,000 of capital gain from the sale of stock. How much of the $45,000 bad debt can Ellen claim as a capital loss in 2020?

a.$12,000, with $33,000 carried forward to 2020

b.$35,000

c.$18,000, with $27,000 carried forward to 2020

d.$0

e.$15,000, with $30,000 carried forward to 2020

Bennett purchased a tract of land for $20,000 in 2014 when he heard that a new highway was going to be constructed through the property and the land would soon be worth $200,000. The highway project was abandoned in 2020 and the value of the land fell to $15,000. Bennett can claim a loss in 2020 of:

a.$180,000

b.$5,000

c.$0

d.$165,000

e.None of these choices are correct.

Which of the following istrueabout capital gains?

a.Net short-term capital gains arenotnetted with net long-term capital losses.

b.Long-term capital gains are never taxed.

c.Short-term capital gains arenotnetted with other capital gains and losses.

d.Long-term capital gains are subject to special tax treatment.

e.None of these choices are correct.

Problem 3-25 Hobby Losses (LO 3.12) Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses: Sales $ 5,000 Depreciation on greenhouse 10,000 Fertilizer, soil, pots 1,500 If an amount is zero, enter "0". a. Select either "Yes" or "No" to indicate which of the following are factors the IRS will consider when evaluating whether the activity is a business or a hobby. 1. Carrying on the activity in a businesslike manner. 2. The time and effort put into the activity indicate you intend to make it profitable. 3. Dependence on the income for the taxpayer's livelihood. 4. Whether the losses are due to circumstances beyond control (or are normal in the startup phase of this type of business) 5. Attempts to change methods of operation to improve profitability. 6. The taxpayer or advisors have the knowledge needed to carry on the activity as a successful business. 7. Success in making a profit in similar activities in the past. 8. The activity makes a profit in some years. 9. The activity is expected to make a future profit from the appreciation of the assets used in the activity. b. If the activity is deemed to be a regular business, what is the amount of Lew's loss from the activity? $ c. If the activity is deemed to be a hobby, what is the amount of Lew's expenses (if any) from the activity that may be deducted? $