CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN: 9780357110362
Author: Murphy
Publisher: CENGAGE L
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Chapter 5, Problem 79IIP
To determine
Ascertain the tax consequences for the situation, whether Person R is engaged in the trade or business or whether Person R is engaged in a hobby activity.
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Shanice owns a food delivery business. She picks up meals from restaurants and
delivers them to his clients' homes. One year Shanice's revenue is $25,000 and her
costs (such as gas and maintenance on her car) is $10,000. If Shanice did not run this
business, she could get a job at a grocery store and make $15,000 that year. Which
of the following statements is true?
Shanice's accounting profit is $15,000. Shanice's economic profit is $0.
Shanice's accounting profit is $10,000. Shanice's economic profit is $20,000.
Shanice's accounting profit is $0. Shanice's economic profit is $15,000.
OShanice's accounting profit is $20,000. Shanice's economic profit is $10,000.
Tyrell has a tax service and accounting business in Redwood City. He decides to
move to Center City, which is 150 miles away and sells his accounting practice to
Able and Baker, a CPA firm. In the sales contract, he agrees that he will refrain
from practicing accounting anywhere within a 20-mile radius of Redwood City for
a period of two years. However, on weekends he returns to his house in Redwood
City, and when clients call him, he meets with them in his home. The sales
agreement:
Ois being violated by Tyrell.
O is invalid, because it is an illegal restraint of trade.
O is illegal, because it is a violation of public policy.
O will be divided into an enforceable, valid portion and an unenforceable, invalid
portion, which is the time provision, because the two-year period is too long.
Molly is a full-time engineer for Y-Corporation. On the weekends, Molly enters fishing competitions in order to earn cash prizes. Molly really enjoys the relaxation of fishing and being near the water. Molly made $5,200 in income and incurred the following expenses during the year for her fishing activities:
Contest Entrance Fees: $5,000
Property taxes on boat: $200
Fishing supplies: $1,000
Depreciation on equipment: $500
Which of the following statements is FALSE about Molly’s fishing activities?
Group of answer choices
Molly’s income from her fishing activities is taxable, even though the fishing activities constitute a hobby.
Hobby losses are not allowed as a deduction.
Since hobby expenses are categorized as miscellaneous itemized deductions, they are currently disallowed as deductions.
Molly’s hobby expenses are fully deductible.
Chapter 5 Solutions
CONCEPTS IN FED.TAX.,2020-W/ACCESS
Ch. 5 - Prob. 1DQCh. 5 - Why does the computation of adjusted gross income...Ch. 5 - Prob. 3DQCh. 5 - Prob. 4DQCh. 5 - Prob. 5DQCh. 5 - Prob. 6DQCh. 5 - Prob. 7DQCh. 5 - Prob. 8DQCh. 5 - Prob. 9DQCh. 5 - What is the difference between a trade or business...
Ch. 5 - Prob. 11DQCh. 5 - Prob. 12DQCh. 5 - Prob. 13DQCh. 5 - Prob. 14DQCh. 5 - Prob. 15DQCh. 5 - Prob. 16DQCh. 5 - Prob. 17DQCh. 5 - Prob. 18DQCh. 5 - Prob. 19DQCh. 5 - Prob. 20DQCh. 5 - Prob. 21DQCh. 5 - Prob. 22DQCh. 5 - Prob. 23DQCh. 5 - Prob. 24DQCh. 5 - Prob. 25DQCh. 5 - Prob. 26PCh. 5 - Prob. 27PCh. 5 - Prob. 28PCh. 5 - Prob. 29PCh. 5 - Prob. 30PCh. 5 - Prob. 31PCh. 5 - Prob. 32PCh. 5 - Prob. 33PCh. 5 - Prob. 34PCh. 5 - Prob. 35PCh. 5 - Prob. 36PCh. 5 - Prob. 37PCh. 5 - Prob. 38PCh. 5 - Prob. 39PCh. 5 - Prob. 40PCh. 5 - Prob. 41PCh. 5 - Prob. 42PCh. 5 - Prob. 43PCh. 5 - Prob. 44PCh. 5 - Prob. 45PCh. 5 - Prob. 46PCh. 5 - Prob. 47PCh. 5 - Prob. 48PCh. 5 - Prob. 49PCh. 5 - Prob. 50PCh. 5 - Prob. 51PCh. 5 - Prob. 52PCh. 5 - Prob. 53PCh. 5 - Prob. 54PCh. 5 - Prob. 55PCh. 5 - Hassad owns a rental house on Lake Tahoe. He uses...Ch. 5 - Ray, 83, is a used car dealer. He lives in a rural...Ch. 5 - Prob. 58PCh. 5 - Prob. 59PCh. 5 - Prob. 60PCh. 5 - Prob. 61PCh. 5 - Prob. 62PCh. 5 - Prob. 63PCh. 5 - Prob. 64PCh. 5 - Prob. 65PCh. 5 - Joy incurs the following expenses in her business....Ch. 5 - Prob. 67PCh. 5 - Prob. 68PCh. 5 - Prob. 69PCh. 5 - Prob. 70PCh. 5 - Prob. 71PCh. 5 - Prob. 72IIPCh. 5 - Prob. 73IIPCh. 5 - Prob. 74IIPCh. 5 - Prob. 75IIPCh. 5 - Prob. 76IIPCh. 5 - Prob. 77IIPCh. 5 - Prob. 78IIPCh. 5 - Prob. 79IIPCh. 5 - Prob. 80IIPCh. 5 - Prob. 81IIPCh. 5 - Prob. 91CPCh. 5 - Prob. 92DCCh. 5 - Prob. 93DCCh. 5 - Prob. 94DCCh. 5 - Prob. 95TPCCh. 5 - Allison and Paul are married and have no children....
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