For an Activity Classified as a Hobby,the Expenses Are Categorized

question 96

Multiple Choice

For an activity classified as a hobby,the expenses are categorized as follows: (1) Amounts deductible under other Code sections without regard to the nature of the activity,such as property taxes and home mortgage interest.
(2) Amounts that affect adjusted basis and would be deductible under other Code sections if the activity had been engaged in for profit (e.g. ,depreciation,amortization,and depletion) .
(3) Amounts deductible under other Code sections if the activity had been engaged in for profit,but only if those amounts do not affect adjusted basis (e.g. ,maintenance,utilities,and supplies) .
If these expenses exceed the gross income from the activity and are thus limited,the sequence in which they are deductible is:

• A)(1), (2), (3).
• B)(1), (3), (2).
• C)(2), (3), (1).
• D)(2), (1), (3).
• E)(3), (2), (1).

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Definitions:

Emerging Adulthood

A developmental period between adolescence and early adulthood, extending from the completion of secondary education to the adoption of adult roles.

Older Adulthood

Older adulthood is a life stage typically beginning around the age of 65, characterized by retirement, changes in health status, and adjustments to social roles.

Marriage

A legally and socially sanctioned union between individuals that establishes rights and obligations between them.

Argue

The act of presenting reasons for or against a thing, often involving verbal exchange with another person.