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In: Accounting

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

Alex, who is single, conducts an activity in 2019 that is appropriately 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 activity, Alex's AGI is $42,000. Determine the amount of income Alex must report and the amount of the expenses he is permitted to deduct. Assume Alex itemizes his deductions. Reportable income: $ ________ . Deductible expenses: $ _______.

Solutions

Expert Solution

Reportable income = AGI + Revenue - Standard deduction for 2019 = 42000 +18000 - 12200 = 47800

Deductible expenses = $0 [ no hobby expenses are allowed as a deduction].

ekkarill92 answered 2 years ago
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