Taxpayer "T" an individual, operated a bakery out of T's house, which was determined to be a hobby by the IRS. In 21 Thad bakery revenue of $5,000 and spent $2,000 on ingredients used to make the bakery goods. T also properly calc depreciation of equipment used exclusively for the bakery at $3,000. Additionally, since T used 15% of T's house exclu for the bakery, T properly allocated 15% of the following expenses to bakery operations. Assuming T is a single 35 year old, who earns a $100,000 salary, and has no other transactions during the year: a. What is T's AGI? b. What is T's Taxable Income?

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To calculate Ts Adjusted Gross Income AGI and Taxable Income we need to consider Ts income an... View the full answer