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? $ _____________