John Henry was a partner in a CPA ﬁrm with adjusted gross income of $200,000 before consideration of income or loss from his farm activities. His home is on 200 acres, 100 of which he uses to plant row crops, 95 of which is timber, and the remaining ﬁve acres consist of the house, barn, sheds, and a long driveway from the paved road to the house.
John uses an oﬃce in his home that is 12 percent of the square footage of the home. He uses this oﬃce only for farming activities. John's records for 2012 are as follows:
(a.) How must John Henry treat the income and expenses of the farm if the activity is held to be a hobby?
(b.) How must John Henry treat the income and expense of the farm if the farming operation is held to be a business?

Question

John Henry was a partner in a CPA ﬁrm with adjusted gross income of $200,000 before consideration of income or loss from his farm activities. His home is on 200 acres, 100 of which he uses to plant row crops, 95 of which is timber, and the remaining ﬁve acres consist of the house, barn, sheds, and a long driveway from the paved road to the house.
John uses an oﬃce in his home that is 12 percent of the square footage of the home. He uses this oﬃce only for farming activities. John's records for 2012 are as follows:
  (a.) How must John Henry treat the income and expenses of the farm if the activity is held to be a hobby?
(b.) How must John Henry treat the income and expense of the farm if the farming operation is held to be a business?

Quizplus · Accepted Answer

The Answer of John Henry was a partner in a CPA ﬁrm with adjusted gross income of $200,000 before consideration of income or loss from his farm activities. His home is on 200 acres, 100 of which he uses to plant row crops, 95 of which is timber, and the remaining ﬁve acres consist of the house, barn, sheds, and a long driveway from the paved road to the house.
John uses an oﬃce in his home that is 12 percent of the square footage of the home. He uses this oﬃce only for farming activities. John's records for 2012 are as follows:
  (a.) How must John Henry treat the income and expenses of the farm if the activity is held to be a hobby?
(b.) How must John Henry treat the income and expense of the farm if the farming operation is held to be a business?

John Henry Was a Partner in a CPA ﬁRm with Adjusted