Generally, for an Activity to Be Treated as a Trade

question 78

Multiple Choice

Generally, for an activity to be treated as a trade or business, which of the following is required:

• A)Always generate a profit
• B)No more than intermittent effort toward the activity
• C)Regular and continual effort designed to seek profit
• D)Organization as a corporation or partnership

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Definitions:

Straight-line Method

A method of calculating depreciation which spreads the cost of an asset evenly across its useful life.

Accumulated Depreciation

The cumulative sum of depreciation costs charged to a fixed asset from the time of its purchase.

Gain or Loss

The financial result of disposing or selling an asset or investment, measured by the difference between the sale price and the asset's book value.

Equipment

Tangible assets used in the operation of a business to produce goods or provide services, such as machinery, computers, or tools.