Kyle drives a race car in his spare time and on weekends.His records regarding this activity reflect the following information for the year. What is the allowable deduction (before any AGI limitation)for depreciation assuming that this activity is not engaged in for profit and Kyle can itemize his deductions?

Question

Kyle drives a race car in his spare time and on weekends.His records regarding this activity reflect the following information for the year.  What is the allowable deduction (before any AGI limitation)for depreciation assuming that this activity is not engaged in for profit and Kyle can itemize his deductions?

Quizplus · Accepted Answer

Since the activity is not engaged in for profit, no deduction is allowed for expenses, including depreciation. However, if Kyle can itemize his deductions, he can deduct up to $1,400 of the expenses as a miscellaneous itemized deduction on Schedule A. The deduction is subject to a 2% floor of adjusted gross income, so if Kyle's AGI is less than $70,000, the allowable deduction is $1,400.

Kyle Drives a Race Car in His Spare Time and on Weekends.His