Sadie Is a Full Time Nurse and a Part Time

question 106

Multiple Choice

Sadie is a full time nurse and a part time painter.Her painting qualifies as a hobby.Her gross income from painting is $7,000.Her expenses include $800 of interest on inventory loans,$5,200 of expenses in conducting business activities,and $2,000 of depreciation of equipment.Which of the following statements about Sadie's hobby activity is/are correct?
I.Sadie will not recognize any taxable income as a result of her hobby.
II.Sadie can deduct the interest of $800 plus $6,200 of other hobby expenses for the year.
III.Sadie will lose at least $1,000 of her depreciation deduction for the current year.
IV.If Sadie uses the standard deduction she will not receive any tax benefit from the hobby expenses.
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• A)Statements I and II are correct.
• B)Statements II and III are correct.
• C)Statements III and IV are correct.
• D)Statements I,II,and III are correct.
• E)Statements II,III,and IV are correct.

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Definitions:

Social Events

Gatherings or activities designed for the purpose of socializing, entertainment, or communal engagement.

Signs Of Addiction

Observable indicators that suggest a person may be compulsively using substances or engaging in behavior despite negative consequences.

Harmful Addiction

A dependency on a substance, activity, or behavior that negatively impacts the individual's health, relationships, or quality of life.

Leisure Time Activities

Activities performed voluntarily during free time for enjoyment, relaxation, or recreation.