What is the total amount of deductions chuck

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Question - Chuck, a dentist, raises prize rabbits for breeding and showing purposes. Assume that the activity is determined to be a hobby. During the year the activity generates the following items of income and expense:

Item Amount

Sale of rabbits for breeding stock $800

Prizes and awards 300

Property taxes on rabbit hutches 200

Feed 600

Veterinary fees 500

Depreciation on rabbit hutches 250

Required:

a. What is the total amount of deductions Chuck may take during the year with respect to the rabbit raising activity?

b. Identify which expenses may be deducted and indicate whether they are deductions for or from AGI.

c. By what amount is the cost basis of the rabbit hutches to be reduced for the year?

Reference no: EM131873770

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