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What is the proper treatment of these expenses as applied to the
following situations? Use the Tax Court allocation method, if
applicable.
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ACC 401 Week 3 DQ 1 Self-Employed Business Income &
Capital Gains
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Ch6.
1. Discuss the definition of trade or business. Why does it matter
whether a taxpayer is classified as an employee or as self-
employed?
2. Discuss the concepts of ordinary, necessary, and reasonable in
relation to trade or business expenses.
9. Discuss the concept of electing §179 expense. Does the election
allow a larger expense deduction in the year of asset acquisition?
15. Why were the hobby loss rules established? What factors
determine whether an activity is a trade or business or a hobby?
Is any one factor controlling?
Ch7.
1. How are the terms basis, adjusted basis, and fair market
value defined as they apply to the calculation of gains and losses?