Gabby Owns and Operates a Part-Time Art Gallery,now in Its

question 89

Multiple Choice

Gabby owns and operates a part-time art gallery,now in its fifth year.She views it as a business activity,but she is concerned that the IRS will challenge her classification and consider it a hobby.Her business results,using the cash method of accounting,were net losses in the first and fourth years and small profits in the second and third years.It is now almost year-end and based on projections,the business is showing a small profit of $6,000.Repairs to the security system and to the heating/cooling system were recently completed and these bills total $7,000.When should Gabby pay these bills?

• A)before year-end to get the current year deduction
• B)next year
• C)split into $6,000 this year and $1,000 next year
• D)It does not matter when she pays the bills.The work was performed this year,so the costs will be deducted this year.

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Definitions:

Digital Media

Electronic media that function using digital codes via computers, cellular phones, smart-phones, and other digital devices that have been released in recent years.