Sonia is a high school English teacher. She operates a small pottery activity on a part-time...
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Sonia is a high school English teacher. She operates a small pottery activity on a part-time basis. In 2022, she reported the following income and expenses from this activity: Revenue from sale of pottery Depreciation on potter's wheel Property taxes on shed where she does pottery Supplies used such as clay, etc. $12,000 (4,000) (2,250) (7.500) Additional information: 5 Sonia had a salary of $120,000 during the year. § She has itemized deductions, not including expenses listed above, of $9,950. 5 Sonia is a single taxpayer. Required: 1. Calculate the amount of Sonia's taxable income assuming that Pottery activity is classified as a hobby. (2.5 marks) 2. If the pottery activity is classified as a trade or business, what will be the amount of Sonia's taxable income. (2.5 marks) 3. What are the criteria necessary for an expenditure to be deductible as business or investment expenses? (3 marks) Sonia is a high school English teacher. She operates a small pottery activity on a part-time basis. In 2022, she reported the following income and expenses from this activity: Revenue from sale of pottery Depreciation on potter's wheel Property taxes on shed where she does pottery Supplies used such as clay, etc. $12,000 (4,000) (2,250) (7.500) Additional information: 5 Sonia had a salary of $120,000 during the year. § She has itemized deductions, not including expenses listed above, of $9,950. 5 Sonia is a single taxpayer. Required: 1. Calculate the amount of Sonia's taxable income assuming that Pottery activity is classified as a hobby. (2.5 marks) 2. If the pottery activity is classified as a trade or business, what will be the amount of Sonia's taxable income. (2.5 marks) 3. What are the criteria necessary for an expenditure to be deductible as business or investment expenses? (3 marks)
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Answer rating: 100% (QA)
Lets calculate Sonias taxable income under two scenarios first assuming the pottery activity is classified as a hobby and second assuming its classifi... View the full answer
Related Book For
South-Western Federal Taxation 2020 Comprehensive
ISBN: 9780357109144
43rd Edition
Authors: David M. Maloney, William A. Raabe, James C. Young, Annette Nellen, William H. Hoffman
Posted Date:
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