Kana is a CPA who loves chinchillas. She breeds chinchillas as pets (she current
ID: 2338361 • Letter: K
Question
Kana is a CPA who loves chinchillas. She breeds chinchillas as pets (she currently owns thirteen of them)
and every so often sells a baby chinchilla to a suitable family to keep as a pet. In the current year, she
sells $250 worth of chinchillas and incurs the following expenses:
Chinchilla breeding cages $300
Advertising for chinchilla sales $2,500
This activity is considered a hobby. Kana has adjusted gross income of $72,000. What is the amount of
income and expense Kana recognizes (assume she itemizes deductions) associated with her chinchilla
hobby if the current year 2018?
2018 income?
2018 deduction?
Explanation / Answer
Solution:-
= (13 * 250)
= $3,250
= (300 + 2,500)
= $2,800
= (3,250 - 2,800)
= $450
= (72,000 + 450)
= $72,450
Income amount in 2018:
Gross income / adjusted gross income $72,000 Miscellaneous itemized deduction / hobby: Hobby income= (13 * 250)
= $3,250
Expenses= (300 + 2,500)
= $2,800
= (3,250 - 2,800)
= $450
= (72,000 + 450)
= $72,450
Income amount in 2018:
$450 Deduction amount in 2018: $2,800 Breaking points on Hobby costs. Generally,we can just deduct our diversion costs up to the measure of side interest income.if our side interest costs are more than our side interest salary ,we have a misfortune from the activity.we can't deduct the misfortune from your other pay.Related Questions
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