Lindsey Forbes, a detective who is single, operates a small pottery activity on a part-time basis. This year she reported the following income and expenses from this activity:

 

Revenue from sale of pottery                                          $ 9,000

Depreciation on potter's wheel                                         (3,000)

Property taxes on shed where she does pottery              (1,200)

Supplies used such as clay, etc.                                        (6,500)

 

In addition, she had salary of $70,000 and itemized deductions, not including expenses listed above, of $6,800.

 

a.   What is the amount of Lindsey's taxable income assuming the activity is classified as a hobby?

b.   What is the amount of Lindsey's taxable income assuming the activity is classified as a trade or business?

Answer rating: 100% (QA)

Answer Gross income Salary 70000 Hobby income 9000 Gross incomeAGI 79000 Deduction from AGI Other ... View the full answer