Which of the Following Is a True Statement

question 36

Multiple Choice

Which of the following is a true statement?

• A)Expenses associated with a "hobby" are never deductible.
• B)The deductibility of an activity's expenses in excess of revenues depends upon whether the activity is primarily profit-motivated or a hobby as determined by facts and circumstances.
• C)Taxpayers engaged in a "hobby" are always presumed to be motivated by profit.
• D)The regulations do not provide any guidance for determining whether an activity is profit motivated.
• E)All of the above are truE.The regulations provide a list of factors for determining whether an activity is profit motivated.The presumption that a hobby is profit motivated depends upon whether the activity generates a profit in three of five consecutive years.

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Definitions:

Leasehold Estate

An interest in real property giving a tenant the right to possession and use of property for a specified time, under certain conditions.

Hierarchy Of Estates

A system that categorizes different types or interests in land and property, ranking them in order of importance or priority, commonly used in real estate and property law.

Conditional Estate

An ownership interest in which the holder has the same interest as that in a fee simple absolute except that this interest is subject to a condition.

Condominium Association

An organization comprising owners of individual units within a condominium project, responsible for enforcing the bylaws and managing the common properties.