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:
$\begin{array}{lr}
\text { Revenue from sale of pottery } & \$ 9,000 \
\text { Depreciation on potter's wheel } & (3,000) \
\text { Property taxes on shed where she does pottery } & (1,200) \
\text { Supplies used such as clay, etc. } & (6,500)
\end{array}$ 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?

Question

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:
 $\begin{array}{lr}
\text { Revenue from sale of pottery } & \$ 9,000 \
\text { Depreciation on potter's wheel } & (3,000) \
\text { Property taxes on shed where she does pottery } & (1,200) \
\text { Supplies used such as clay, etc. } & (6,500)
\end{array}$ 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?

Quizplus · Accepted Answer

The Answer of 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:
 $\begin{array}{lr}
\text { Revenue from sale of pottery } & \$ 9,000 \
\text { Depreciation on potter's wheel } & (3,000) \
\text { Property taxes on shed where she does pottery } & (1,200) \
\text { Supplies used such as clay, etc. } & (6,500)
\end{array}$ 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?

Lindsey Forbes, a Detective Who Is Single, Operates a Small