Jenna Leigh Is Employed as a Receptionist for a CPA

question 48

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 a miscellaneous itemized deduction.

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Definitions:

Pump Division

A specialized business segment within a company that focuses on the development, manufacturing, and sales of pumps and related products.

Valve Division

A segment or branch within a company that focuses on the production, development, or sale of valves.

Transfer Price

The internal charge assigned to the exchange of goods or services between the departments or divisions of the same organization, affecting both profitability and tax liabilities.

Outside Supplier

An external entity or company that provides goods or services to another company, often part of the supply chain.