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:

Financial Health

Refers to the state of one's personal financial situation, including the ability to manage expenses, save for the future, and remain free from excessive debt.

Electronic Medical Record

A digital version of a patient’s medical history and treatment records maintained by one healthcare provider over time.

Third-Party Check

A check that is written by one party and made payable to another but is cashed or deposited by a third party.

Endorsement

The act of giving public approval or support to someone or something.