In his spare time, Fred likes to restore old furniture and sell it to his friends....

 

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In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2016, he sells $500 worth of furniture and has $21,000 worth of expenses. Which one of the following is true? a. Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobby. b. Fred may deduct all $21,000 of his expenses because Fred is engaged in a trade or business. c. Fred cannot deduct any of the expenses because he is engaged in a hobby. d. Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby. e. None of the above. In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2016, he sells $500 worth of furniture and has $21,000 worth of expenses. Which one of the following is true? a. Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobby. b. Fred may deduct all $21,000 of his expenses because Fred is engaged in a trade or business. c. Fred cannot deduct any of the expenses because he is engaged in a hobby. d. Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby. e. None of the above.

Answer rating: 100% (QA)

Freds ability to deduct his expenses depends on whether his furniture restoration activity is consid... View the full answer