Les has collected stamps in his spare time for years. He purchased many of his stamps at a price much
Les has collected stamps in his spare time for years. He purchased many of his stamps at a price much lower than the current market value. Les recently lost his job as a carpenter. Since his wife works full time, he decides to start an internet-based stamp “store”. He sold $6,500 worth of stamps in 2020 and reported the following expenses:
Supplies $ 2,000
Equipment rental 1,500
Web assistance 2,500
Office rental 750
AGI without considering the effect of the stamp operation income or expenses is $100,000. What is the effect of the income and expenses described above on AGI and itemized deductions (if any) if the business is classified as a:
ALSO, Les insists that this is a business, not a hobby. Research this issue. Provide support for your conclusion as to whether it is a business or a hobby. Cite and print the first page of at least one code section, and at least one other authoritative source (i.e. Regulation, Rev. Rul), etc.