Chuck, a dentist, raises prize rabbits for breeding and showing purposes. Assume that the activity is determined
Question:
Chuck, a dentist, raises prize rabbits for breeding and showing purposes. Assume that the activity is determined to be a hobby. During 2019, the activity generates the following items of income and expense:
Item | Amount |
Sale of rabbits for breeding stock | $800 |
Prizes and awards | (300) |
Property taxes on rabbit hutches | (200) |
Feed | (600) |
Veterinary fees | (500) |
Depreciation on rabbic hutches | (250) |
a. What is the coral amount of income and deductions Chuck should report for 2019 with respect to the rabbit raising activities?
b. Identify which expenses may be deducted and indicate whether they are deductions for or from AGI.
c. By what amount is the cost basis of the rabbit hutches to be reduced for the year?
Step by Step Answer:
Federal Taxation 2020 Comprehensive
ISBN: 9780135196274
33rd Edition
Authors: Timothy J. Rupert, Kenneth E. Anderson, David S. Hulse