Problem 3-25 Hobby Losses (LO 3.12) Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses: Sales $ 5,000 Depreciation on greenhouse 10,000 Fertilizer, soil, pots 1,500 If an amount is zero, enter “0”. a.  Select either “Yes” or “No” to indicate which of the following are factors the IRS will consider when evaluating whether the activity is a business or a hobby. 1.   Carrying on the activity in a businesslike manner. Yes  2.   The time and effort put into the activity indicate you intend to make it profitable. Yes  3.   Dependence on the income for the taxpayer’s livelihood. Yes  4.   Whether the losses are due to circumstances beyond control (or are normal in the startup phase of this type of business). Yes  5.   Attempts to change methods of operation to improve profitability. Yes  6.   The taxpayer or advisors have the knowledge needed to carry on the activity as a successful business. Yes  7.   Success in making a profit in similar activities in the past. Yes  8.   The activity makes a profit in some years. Yes  9.   The activity is expected to make a future profit from the appreciation of the assets used in the activity. Yes    Feedback b.  If the activity is deemed to be a regular business, what is the amount of Lew’s loss from the activity? $ c.  If the activity is deemed to be a hobby, what is the amount of Lew’s expenses (if any) from the activity that may be deducted? $

Problem 3-25
Hobby Losses (LO 3.12)

Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses:

Sales $ 5,000
Depreciation on greenhouse 10,000
Fertilizer, soil, pots 1,500

If an amount is zero, enter “0”.

a.  Select either “Yes” or “No” to indicate which of the following are factors the IRS will consider when evaluating whether the activity is a business or a hobby.

1.   Carrying on the activity in a businesslike manner. Yes 
2.   The time and effort put into the activity indicate you intend to make it profitable. Yes 
3.   Dependence on the income for the taxpayer’s livelihood. Yes 
4.   Whether the losses are due to circumstances beyond control (or are normal in the startup phase of this type of business). Yes 
5.   Attempts to change methods of operation to improve profitability. Yes 
6.   The taxpayer or advisors have the knowledge needed to carry on the activity as a successful business. Yes 
7.   Success in making a profit in similar activities in the past. Yes 
8.   The activity makes a profit in some years. Yes 
9.   The activity is expected to make a future profit from the appreciation of the assets used in the activity. Yes 
 

Feedback

b.  If the activity is deemed to be a regular business, what is the amount of Lew’s loss from the activity?
$

c.  If the activity is deemed to be a hobby, what is the amount of Lew’s expenses (if any) from the activity that may be deducted?
$

Calculate the price of your order

550 words
We'll send you the first draft for approval by September 11, 2018 at 10:52 AM
Total price:
$26
The price is based on these factors:
Academic level
Number of pages
Urgency
Basic features
  • Free title page and bibliography
  • Unlimited revisions
  • Plagiarism-free guarantee
  • Money-back guarantee
  • 24/7 support
On-demand options
  • Writer’s samples
  • Part-by-part delivery
  • Overnight delivery
  • Copies of used sources
  • Expert Proofreading
Paper format
  • 275 words per page
  • 12 pt Arial/Times New Roman
  • Double line spacing
  • Any citation style (APA, MLA, Chicago/Turabian, Harvard)

Our guarantees

Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.

Money-back guarantee

You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.

Read more

Zero-plagiarism guarantee

Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.

Read more

Free-revision policy

Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.

Read more

Privacy policy

Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.

Read more

Fair-cooperation guarantee

By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.

Read more