Charles is a single person, age 35, with no dependents. In 2019, Charles has gross income of $75,000 from his sole proprietorship. Charles also incurs $80,000 of deductible business expenses in connection with his proprietorship. He has interest and dividend income of $22,000.

1. Charles has $7,000 of itemized deductions. Charles's taxable income is what?

2. Assume the IRS declares Charles business as a hobby. What is Charles taxable income under that assumption (assume all other facts including itemized deductions of $7,000)?

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1 To calculate Charless taxable income Gross income from sole proprietorship 75000 Deductible busine... View the full answer