Which of the Following Is a True Statement

question 6

Multiple Choice

Which of the following is a true statement?

• A) Expenses associated with a "hobby" are never deductible.
• B) The deductibility of an activity's expenses in excess of revenues depends upon whether the activity is primarily profit-motivated or a hobby as determined by facts and circumstances.
• C) Taxpayers engaged in a "hobby" are always presumed to be motivated by profit.
• D) The regulations do not provide any guidance for determining whether an activity is profit motivated.
• E) All of these are true.

---

Definitions:

Gateway Drug

A substance that, when used, may lead to the use of more harmful drugs.

Marijuana

A psychoactive drug from the Cannabis plant used for medical or recreational purposes, known for containing THC among other cannabinoids.

Data

factual information or measurements collected for analysis, reference, or reasoning, used in making decisions or determining conclusions.

THC

Tetrahydrocannabinol, the psychoactive compound found in cannabis plants that is responsible for most of marijuana's psychological effects.