What is the amount of Lew expenses

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Reference no: EM132705426

Problem - Lew is a practicing CPA who decides to raise bonsai as a business. Lew engages in the activity and has the following revenue and expenses:

Sales $5,000

Depreciation on greenhouse 10,000

Fertilizer, soil, pots 1,500

Required -

a. What are the factors that the IRS will consider when evaluating whether the activity is a hobby?

b. If the activity is deemed to be a regular business, what is the amount of Lew's loss from the activity?

c. If the activity is deemed to be a hobby, what is the amount of Lew's expenses (if any) from the activity that may be deducted?

Reference no: EM132705426

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