Edward has always enjoyed sailing. In 2016, he entered several regattas and mana

Question

Edward has always enjoyed sailing. In 2016, he entered several regattas and managed to win prize money of $1,700. His expenses associated with the regattas exceed $23,000. Which of the following statements is correct?

1. Edward may absolutely not deduct any of these expenses.

2. Edward should only deduct 50% of these expenses. 3.

Edward's expenses far exceed his winnings. Therefore, he needn't worry about reporting the winnings on his 2016 income tax return.

4. The fact that Edward derives significant personal enjoyment from the activity may be a factor in determining if all of his expenses are deductible.

Explanation / Answer

Answer:(Option 4)The fact that Edward derives significant personal enjoyment from the activity may be a factor in determining if all of his expenses are deductible

Explanation: Since he derives personal enjoyment, the expenes and price money do not have an affect in his finances and therefore will be a factor for determining if his expense are deductible.

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