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 these are true.

Question

Quizplus · Accepted Answer

The deductibility of expenses related to an activity depends on whether it is primarily profit-motivated or a hobby, as determined by facts and circumstances. The IRS has specific guidelines for this determination. Expenses associated with a hobby are generally not deductible, while those for profit-motivated activities in excess of revenue can be deducted. Taxpayers engaged in a hobby are not presumed to be motivated by profit, and the regulations do provide guidance for determining whether an activity is profit-motivated.

Which of the Following Is a True Statement