Gary Is a Successful Architect Who Also Sings at Weddings

question 53

Multiple Choice

Gary is a successful architect who also sings at weddings.This year,he received $5,400 of fees for his singing and spent $6,250 on voice lessons,sheet music,and travel to the weddings.Which of the following statements is true?

• A)Because the singing activity resulted in a loss,Gary can't treat it as a business.
• B)If facts and circumstances support Gary's claim that his singing activity is a business,he can deduct an $850 above-the-line loss.
• C)Because Gary's primary source of income is his architecture practice,he can't treat the singing activity as a business.
• D)None of the above is true.

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Definitions:

Double-Declining-Balance

A method of accelerated depreciation where an asset's book value is reduced at double the rate of traditional straight-line depreciation.

Book Value

The net value of an asset, calculated as the original cost minus accumulated depreciation, depletion, or amortization.

Plant Asset

Long-term tangible asset that is used in the production process of a company, such as machinery, buildings, and equipment, contributing to the company's operations.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value over time.