John Baron, a professional baseball player, raises Black Angus cattle under circumstances that would indicate that the activity is a hobby. His adjusted gross income for the year is $50,000, and he has $500 of other miscellaneous itemized deductions, all of which are subject to the two-percent ﬂoor. During the taxable year, he paid $300 in state taxes on real property used in the cattle operation. Feed for the cattle cost $1,500. fte income from the sale of cattle was $1,400.
(a.) Under the hobby loss rule, to what extent is the expense of $1,500 deductible?
(b.) Under the two-percent-of-adjusted-gross-income limitation, how much is the overall deductible amount of his itemized deductions?

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The Answer of John Baron, a professional baseball player, raises Black Angus cattle under circumstances that would indicate that the activity is a hobby. His adjusted gross income for the year is $50,000, and he has $500 of other miscellaneous itemized deductions, all of which are subject to the two-percent ﬂoor. During the taxable year, he paid $300 in state taxes on real property used in the cattle operation. Feed for the cattle cost $1,500. fte income from the sale of cattle was $1,400.
(a.) Under the hobby loss rule, to what extent is the expense of $1,500 deductible?
(b.) Under the two-percent-of-adjusted-gross-income limitation, how much is the overall deductible amount of his itemized deductions?

John Baron, a Professional Baseball Player, Raises Black Angus Cattle