Which of the Following Factors Absolutely Must Be Present for an Activity

question 37

Multiple Choice

Which of the following factors absolutely must be present for an activity to be considered a trade or business for tax purposes?

• A)The activity is profitable most of the time.
• B)Taxpayer has experience in the activity.
• C)Taxpayer has a mailing address and phone number for his business that is different from his personal address and phone number.
• D)Taxpayer has a profit motive for engaging in the activity.
• E)All of the above factors must be present to have a trade or business activity.

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Definitions:

Tax Rate

The slice of income or profits that is claimed by the government from corporations or people in the form of taxes.

Break-even Level

The point at which total costs and total revenue are equal, resulting in no net loss or gain from business operations.

Earnings per Share

The portion of a company's profit allocated to each outstanding share of common stock, serving as an indicator of the company's financial health.

Repurchase Shares

The act of a company buying back its own shares from the marketplace, reducing the number of outstanding shares.