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Statements regarding the treatment of the hobby activities

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Reference no: EM131797960

Alex, who is single, conducts an activity in 2016 that is appropriately classified as a hobby. The activity produces the following revenues and expenses:

Revenue $18,000
Property taxes 3,000
Materials and supplies 4,500
Utilities 2,000
Advertising 5,000
Insurance 750
Depreciation 4,000

Without regard to this activity, Alex's AGI is $42,000 and his personal exemption is $4,050.

Complete the following statements regarding the treatment of the hobby activities.

  • Excluding the property taxes, his total deductible expenses (before any AGI limitations) is limited to $ _____________.
  • Alex's reportable net income from the hobby on his tax return is $_______________  and his overall taxable income is $_________________.

Reference no: EM131797960

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