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:

Conditioned Stimulus

A previously neutral stimulus that, after becoming associated with an unconditioned stimulus, eventually triggers a conditioned response.

Interstimulus Interval

The duration of time between the end of one stimulus and the beginning of another.

Conditioned Stimulus

A formerly neutral trigger that, upon association with an unconditioned stimulus, leads to eliciting a conditioned response.

Unconditioned Stimulus

In classical conditioning, a stimulus that naturally and automatically triggers a response without the need for learning.