Question

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
a. What are the factors that the IRS will consider when evaluating whether the activity is a hobby?
___________________________________________________________________________________________________________________________________________________________
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? $ ___________________________________________________


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  • CreatedJuly 16, 2015
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