Calculate the tax consequences for the following hobby: Income $23,000 Mortgage

ID: 2369564 • Letter: C

Question

Calculate the tax consequences for the following hobby:

Income $23,000

Mortgage Interest and property taxes allocable to hobby 12,000

Depreciation 4,000

Supplies and fees 7,000

Telephone for hobby 3,000

Hi,

Please find the answer as follows:

Income = 23000

Less Mortgage Interest and property taxes allocable to hobby = 12000

Supplies and fees = 7000

Telephone for Hobby = 3000

Depreciation which will be limited to (23000 - 12000 - 7000 - 3000) = 1000

Taxable Income = 0

Therefore, the tax consequence will be 0 tax liability.

Thanks.

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.