Question

Would any of the following items be deductible on an individual's income tax return? If so, would the item be deductible "for" or "from" AGI? Explain each item. (a.) Hobby expenditures of $2,000. The taxpayer had revenue from the hobby activity in excess of $2,000. (b.) A $3,000 loss on the sale of a personal sailboat. (c.) Interest of $8,000 on money borrowed to purchase tax-exempt securities. (d.) A $6,000 unrealized decline in the value of stock held in an individual's investment portfolio.

Answer 1

Particulars	Amount	Deduction	Explanation
a. Hobby expenditure	2000	From AGI	Deductible as itemized deduction subject to 2% AGI limitation. If it is 2018 year then no deduction available.
b. loss on sale of personal use asset	3000	Not deductible	Loss on personal use assets are not deductible
c. Interest expense	8000	Not deductible	Expenditure incurred to produce tax-exempt income is not deductible
d. unrealized loss	6000	Not deductible	Unrealized gains and losses are not recognized for tax purpose