Jenna Leigh Is Employed as a Receptionist for a CPA

question 45

Multiple Choice

Jenna Leigh is employed as a receptionist for a CPA firm, but on evenings and weekends, she bakes wedding cakes. In each of the past four years, Jenna's baking activity resulted in a net profit. This year, the activity generated a $720 net loss. Which of the following statements is true?

• A) The legal presumption is that Jenna's $720 loss is a business loss.
• B) The legal presumption is that Jenna's $720 loss is a nondeductible hobby loss.
• C) Jenna must include the revenues from her baking activity in gross income but can't deduct any of her related expenses.
• D) Jenna is allowed to report her $720 loss as an itemized deduction.

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Definitions:

Parietal Lobe

A region of the brain associated with processing sensory information regarding the location of parts of the body as well as interpreting visual information and processing language and mathematics.

Mental Speed

The rate at which an individual can process information, often measured by reaction times in cognitive tasks.

Working Memory Capacity

The amount of information an individual can hold and manipulate in their mind for a short period.

Fluid Intelligence

The skill to apply critical thinking and resolve challenges in unfamiliar scenarios, without relying on pre-existing knowledge.