Diane, a Successful Accountant with an Annual Income of $150,000

question 2059

Essay

Diane, a successful accountant with an annual income of $150,000, also enjoys raising and training race horses, an activity in which she spends about 10 hours per week. Over the past five years her winnings from races have amounted to $20,000. She employs neighborhood children to feed the horses but has a professional trainer who works with the horses about 5 hours per week. Discuss some of the factors that might enter into the determination of whether or not this activity is a hobby or a trade/business.

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Definitions:

ANOVA

A statistical method, Analysis of Variance, used to compare the means of three or more samples to understand if at least one sample mean significantly differs from the others.

Hypothesis

A supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Test For Equality

A statistical method used to determine if two or more groups have statistically significant differences in means.

Variances

Measures of how much a set of numbers is spread out from their average value, indicating distribution dispersion.