Indicate the Proper Treatment in the Current Year for the Underlined

question 105

Multiple Choice

Indicate the proper treatment in the current year for the underlined amounts.Treat each item as an independent event.Indicate whether the amount is deductible or not;if deductible whether it is deductible FOR or FROM AGI;and indicate the amount of the deduction for the current year considering any relevant limitations.Assume the taxpayer has deductions greater than the standard deduction,has AGI of $69,000 without regard to the following transactions and has no "total" income limitations related to itemized deductions.
-Hobby expenses of $2,500.Hobby income is $2,000.Amount $2,000,subject to 2% of AGI

• A)Not Deductible
• B)Deductible - For AGI
• C)Deductible - From AGI

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Definitions:

Production Possibility

A concept representing the various combinations of goods and services an economy can produce, given certain resources and technology.

Linear Production

A production process where inputs are combined in fixed proportions and the output level changes linearly with changes in input levels.

Labor Hours

A measure of the amount of work effort, in hours, performed by employees within a specific time period.

Normative View

An opinion or viewpoint based on what is considered to be ideal or how things should be rather than on empirical evidence.