For the Years 2011 Through 2015 (Inclusive)Max,a Surgeon,has Been Involved

question 2

Multiple Choice

For the years 2011 through 2015 (inclusive) Max,a surgeon,has been involved in bowling competitions.Only in 2014 and 2015 did his revenue exceed the expenses from the activity.Which statement is correct?

• A)The activity is a business.The IRS cannot prove it is a hobby.
• B)The activity is a hobby.Max cannot prove it is a business.
• C)The activity is presumed to be a business.However,the IRS may prove it is a hobby.
• D)The activity is presumed to be a hobby.However,Max may prove it is a business.

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Definitions:

Lessor's Tax Rate

The tax rate applicable to the income earned from leasing assets or property by the lessor.

Capital Lease

A lease agreement that is classified as a purchase by the lessee for accounting purposes, because it transfers substantially all the risks and rewards of ownership.

Present Value

The current worth of a future sum of money or stream of cash flows, given a specified rate of return.