LastName1Students NameInstructors NameCourse NameDateTax research problemThis question states that IRS classified the film making business of Mona to be a hobby.The accounting firm on the other side advices Mona to offset the losses on the tax return usingincome from the law firm. Mona used the income from the law firm to offset the losses incurredin the film making business. According to IRS it is not correct to offset losses from an activitythat is not intended to generate profit using income from other activities. This therefore give riseto a lot of problems.The IRS has indications on which we can determine whether the activity undertaken byMona is a business or a hobby. There are also limitations on which an activity is considered to bea business. The IRS indicates that an activity qualifies as a business when there is a higherexpectation of earning or generating profit (treasury). The problems that arises from the questionare the factors that would help determine if Mona was supposed to offset losses from filmmaking using income from the law firm.The fist problem is to determine if the time an effort put into film making by Monaindicated a determination of ...
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