IRS Compliance Issues - discussion

IRS Compliance Issues

In the textbook, the Internal Revenue code states that in general business expenses are deductible as long as they are the ordinary and necessary expenses or carrying on a trade or business.  After reviewing the scenario, suggest as least three (3) methods that the IRS could use in order to determine if hobby and trade expenses meet such conditions.  Provide specific examples of such methods. 

Analyze at least two (2) of the IRS guidelines on the deductibility of expense related to vacations homes in order to determine the fundamental way in which taxpayers are likely to abuse them, and ascertain the most effective means for the IRS to detect taxpayer abuse.  Provide support for your rationale.