In Determining Whether an Activity Should Be Classified as a Hobby

question 89

Multiple Choice

In determining whether an activity should be classified as a hobby, the tax law provides a rebuttable presumption with regard to the profits or losses of an activity.Which of the following statements describes the profit/loss test which must be satisfied in order to meet the presumption that the activity is not a hobby?

• A)The activity shows a profit for 3 of the 5 previous years.
• B)The activity shows a loss for 3 of the 5 previous years.
• C)The activity shows a profit for 3 of the 7 previous years.
• D)The activity shows a loss for 3 of the 7 previous years.
• E)None of the above.

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Definitions:

Formal Policies

Officially established rules or guidelines within an organization that dictate certain actions or behaviors, designed to achieve consistency and compliance.

Preconventional

A level of moral reasoning in Kohlberg's theory where behavior is influenced by external rewards and punishments.

Moral Development

The process through which individuals evolve in their understanding of what is right and wrong and in their behavior in accordance with this understanding.

Fixed Points of Reference

Specific, unchanging locations or objects used for orientation, measurement, or to determine one's position in space.