Which of the following is a true statement?
A) Expenses associated with a "hobby" are never deductible.
B) The deductibility of an activity's expenses in excess of revenues depends upon whether the activity is primarily profit-motivated or a hobby as determined by facts and circumstances.
C) Taxpayers engaged in a "hobby" are always presumed to be motivated by profit.
D) The regulations do not provide any guidance for determining whether an activity is profit motivated.
E) All of the choices are true.

Question

Quizplus · Accepted Answer

The deductibility of expenses in excess of revenues for an activity depends upon whether it is primarily profit-motivated or a hobby as determined by facts and circumstances. The IRS provides guidance on determining whether an activity is profit-motivated or not. Expenses associated with a hobby are generally not deductible, but if the activity is considered a business, then its expenses may be deductible. Taxpayers engaged in a hobby are not always presumed to be motivated by profit. Therefore, B is the best answer.

Which of the Following Is a True Statement