The CEO of ABC Corporation is a dog lover. He and his spouse like cocker spaniels and
Question:
a. Why might Congress distinguish between hobby activities and trade or business activities?
b. If you were writing the tax code, what rules (or tests) would you write to distinguish an activity as a hobby versus a trade or business? Explain the purpose of each rule (or test).
c. Would the CEO’s dog breeding activity be classified as a hobby or business under your rules?
d. Refer to one of the sources listed in Appendix 2.1 to ascertain the IRC rules for classification. Would the CEO’s dog breeding activity be classified as a hobby or business under IRC rules?
e. If the dog breeding activity was classified as a business, how much would the CEO be allowed to deduct against his other income? Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...
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Related Book For
Taxes And Business Strategy A Planning Approach
ISBN: 9780132752671
5th Edition
Authors: Myron Scholes, Mark Wolfson, Merle Erickson, Michelle Hanlon
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