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Chapter 5 - Fall 11 - Why is this solution different than...

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Burkett – Tax I – Chapter 5 1 Hobby Deductions – 3 Tier (Ex. 38, p. 5.24-25) B is a physician with a $100K AGI. She has a farm as a hobby and generates gross income of $18,000 Expenses for current year are: Property taxes $ 6,000 Labor, feed & vet bills 10,000 Depreciation 4,000 20,000 Net Income <$2,000> Amount & type of deductions? Net Deduction Gross income $ 18,000 Deductions: Tier 1: Business expense or itemized deduction Tier 2: Business expense if not hobby Tier 3: Depreciation expense Carryover of limited deductions?
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