Author Question: Juanita knits blankets as a hobby and sells them. In the current year, she earns $5,000 from her ... (Read 66 times)

DelorasTo · **on:** Sep 13, 2020

Question 1

Jason sells stock with an adjusted basis of $66,000 to JJ Inc., his 60% owned corporation, for its fair market value of $60,000. JJ Inc. sells the stock three years later for $67,000. JJ Inc.'s recognized gain or loss on the sale will be
◦ $0.
◦ ($3,000).
◦ $1,000.
◦ $4,000.

Question 2

Juanita knits blankets as a hobby and sells them. In the current year, she earns $5,000 from her blanket sales and incurs expenses of $600. Juanita does not itemize deductions. On her tax return, she should
◦ report $5,000 of hobby income and deduct $600 of hobby expenses from AGI.
◦ report $5,000 of hobby income and deduct $600 of hobby expenses for AGI.
◦ report $5,000 of hobby income and deduct nothing from AGI since Juanita does not itemize deductions.
◦ report no hobby income and no hobby deductions.

Brenm · **Reply #1 on:** Sep 13, 2020

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