Archie Smith works full-time as a dentist and is in a 50% tax bracket. He lives on an acreage and he began a part-time farming operation last year (20x1). During 20x1, Archie incurred farm expenses
totaling $38,500 and he received $5,200 in farming revenue. Operations became more profitable this year, however, and in 20x2 Archie's farm revenues were $20,000 and expenses totaled $16,000.
Required:
a)What type of loss was Archie able to recognize in 20x1? Briefly explain your answer.
b)Calculate the loss that Archie was able to apply against his other sources of income in 20x1.
c)What effect will the 20x1 operations have on the 20x2 and future year's taxable income? Show yo calculations.

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The Answer of Archie Smith works full-time as a dentist and is in a 50% tax bracket. He lives on an acreage and he began a part-time farming operation last year (20x1). During 20x1, Archie incurred farm expenses
totaling $38,500 and he received $5,200 in farming revenue. Operations became more profitable this year, however, and in 20x2 Archie's farm revenues were $20,000 and expenses totaled $16,000.
Required:
a)What type of loss was Archie able to recognize in 20x1? Briefly explain your answer.
b)Calculate the loss that Archie was able to apply against his other sources of income in 20x1.
c)What effect will the 20x1 operations have on the 20x2 and future year's taxable income? Show yo calculations.

Archie Smith Works Full-Time as a Dentist and Is in a 50