a Under the hobby loss rule to what extent is the expense of 1500 deductible b

# A under the hobby loss rule to what extent is the

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(a) Under the hobby loss rule, to what extent is the expense of \$1,500 deductible? (b) Under the 2%-of-adjusted-gross-income limitation, how much is the overall deductible amount of his itemized deductions?
Question94. SA 19. (TCO G) Bob Smith, a professional basketball player, raises Black Angus cattle under circumstances that would indicate that the activity is a hobby. His adjusted gross income for the year is \$80,000, and he has \$1,000 of other miscellaneous itemized deductions, all of which are subject to the 2% floor. During the taxable year, the feed for the cattle costs \$3,000. The income from the sale of cattle was \$2,800. (a) Under the hobby loss rule, to what extent is the expense of \$3,000 deductible? (b) Under the 2%-of-adjusted-gross-income limitation, how much is the overall deductible amount of his itemized deductions? Question95. SA 19. (TCO G) John Davis, a professional dentist, raises horses under circumstances that would indicate that the activity is a hobby. His adjusted gross income for the year is \$100,000, and he has \$2,000 of other miscellaneous itemized deductions, all of which are subject to the 2% floor. During the taxable year, the cost for feeding horses was \$3,000. The income from the sale of horses was \$2,800. row 15
(a) Under the hobby loss rule, to what extent is the expense of \$3,000 deductible? (b) Under the 2%-of-adjusted-gross-income limitation, how much is the overall deductible amount of his itemized deductions? Points : Instructor Explanation: (a) Under the hobby loss rule, the expense of \$3,000 is deductible only to the extent of \$2,800 (gross income). (b) Under the 2%-of-adjusted-gross- income limitation, the \$2,800 hobby loss deduction is aggregated with the other miscellaneous itemized deductions (\$2,000), and the deductible amount becomes \$600 (\$100,000 × 2% = \$2,000; \$2,800 + \$2,000 - \$2,000 = \$2,800). Edit Delete 96. End of Question Pool - "" End of pool to row Question97. Start of Question Pool - "" - The exam will display 1 of these questions Edit Pool Delete Pool Pool Start Row Entire pool to row Entire pool to page Question98. SA 20. (TCO I) Jake, a single individual with a salary of \$40,000, paid the following expenses during the year. Alimony: \$8,000 Charitable contributions: \$2,000 Casualty loss (after \$100 floor): \$1,000 Mortgage interest on personal residence: \$3,000 Moving expenses: \$1,500 Student loan interest: \$1,000 Contribution to a traditional IRA: \$2,000 Analyze the above expenses, and determine which ones are deductible for AGI. Please support your position.

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