Which of the following is/are trade or business expenses?
I.Mahlon incurs expenses related to investing in stocks and bonds. Mahlon is a Sociology professor at State University but spends 10-15 hours per week on his investments. Almost 2/3 of Mahlon's annual income comes from his investments as dividends and interest.
II.Shaheen has expenses related to managing her portfolio of securities. The short-term trading of her securities generates most of her annual income. She has no other job.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Which of the following is/are trade or business expenses?
I.Mahlon incurs expenses related to investing in stocks and bonds. Mahlon is a Sociology professor at State University but spends 10-15 hours per week on his investments. Almost 2/3 of Mahlon's annual income comes from his investments as dividends and interest.
II.Shaheen has expenses related to managing her portfolio of securities. The short-term trading of her securities generates most of her annual income. She has no other job.
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A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Trade or business expenses are related to activities that are conducted as a regular and continuous business or trade. Statement I does not qualify as a trade or business expense as it is related to investing in stocks and bonds, which is not a regular and continuous business or trade for a Sociology professor. Statement II qualifies as a trade or business expense as Shaheen is managing her portfolio of securities as a regular and continuous trade, and this generates most of her annual income.

Which of the Following Is/are Trade or Business Expenses