Archie Smith Works Full-Time as a Dentist and Is in a 50

question 4

Essay

Archie Smith works full-time as a dentist and is in a 50% tax bracket. He lives on an acreage where he began a part-time farming operation last year (20x1). During 20x1, Archie incurred farm expenses totaling $38,500 and he received $5,200 in farming revenue. Operations became more profitable this year, and in 20x2 Archie's farm revenues were $20,000 and expenses totaled $16,000.
Required:
a) Name the type of loss that Archie was able to recognize in 20x1? Briefly explain your answer.
b) Calculate the loss from farming operations that Archie was able to apply against his other sources of income in 20x1.
c) What effect will the 20x1 operations have on Archie's 20x2 and future year's taxable income? Show your calculations.

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Definitions:

Performance Appraisals

The systematic evaluation of an employee's job performance and overall contribution to an organization, typically involving the assessment of various criteria.

Passive Employees

Workers who tend to follow directions without active engagement, rarely initiating action or expressing opinions in the workplace.

Emotional Development

The process through which individuals gain awareness of their emotions, understand how to express them, and learn how to manage both positive and negative feelings effectively.

Full Responsibility

Refers to a state where an individual or group is completely accountable for their actions, decisions, and outcomes within a project or role.