acc421WA3 - Chapter 6 Question 24 If an activity is...

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Chapter 6 Question 24 If an activity is determined to be a hobby, the expenses are deductible only to the extent of the gross income from the hobby. These deductions are adjusted from AGI as itemized deductions to the extent they exceed 2% of AGI. So, if the taxpayer uses the standard deduction rather than itemizing, all hobby loss deductions are wasted. Problem 37 Mary’s deductible losses would include Sale of Green Corporate Stock $3,000; Sale of city of York Bonds $4,500; Theft of uninsured business use notebook computer $2,000. Total $9,500 Problem 38 Accrual Method Income Sales Revenue 95,000 Expenses Wage 29,000 Office 2,000 Utilities and Telephone 5,400 Insurance 4,000 Rent 9,750 Total Expenses 50,150 AGI 44,850
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Income Sales Revenue 76,000 Expenses Wage 26,000 Office 2,000 Bad Debt 500 Utilities and Telephone 5,400 Insurance 4,000 Rent 9,000 Total Expenses 46,900 AGI 29,100 Problem 41 The amount of Doug’s deductable expenses is $1700. Doug’s legal fees are deductable, but the actual fines are not. Problem 42
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This note was uploaded on 10/16/2011 for the course ACCOUNTING 421 taught by Professor ?? during the Spring '10 term at Thomas Edison State.

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acc421WA3 - Chapter 6 Question 24 If an activity is...

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