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In: Accounting

Alex, who is single, conducts an activity in 2019 that is classified as a hobby. The...

Alex, who is single, conducts an activity in 2019 that is classified as a hobby. The activity produces the following revenues and expenses.

Revenue $18,000
Property taxes 3,000
Materials and supplies 4,500
Utilities 2,000
Advertising 5,000
Insurance 750
Depreciation 4,000

Without regard to this hobby, Alex's AGI is $42,000.

Determine the amount of gross income that Alex must report and the amount of expenses he is permitted to deduct. Assume Alex itemizes his deductions.

Reportable income: $
Deductible expenses: $

Solutions

Expert Solution

Ans: According to law,hobby related expenses are not deductible but income is part of gross income.

Standard deduction for 2019= 12,200

A). Reportable income = $18,000 i.e. revenue

B). Deductible expenses= i.e. Property  taxes= $3000

ekkarill92 answered 2 years ago
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