Final answer:
The true statement is that the deductibility of an activity's expenses in relation to revenues depends on whether the activity is profit-motivated or a hobby. The IRS provides guidelines to determine this based on several factors such as the taxpayer's intentions and operations.
Step-by-step explanation:
The correct statement in this scenario is B. The deductibility of an activity's expenses in excess of revenues depends upon whether the activity is primarily profit-motivated or a hobby as determined by facts and circumstances. This is because the Internal Revenue Service (IRS) in the United States allows taxpayers to deduct expenses for activities they engage in with the intention of making a profit. However, if the IRS deems the activity a hobby, and not intended for profit, the expenses are not generally deductible against other income. To differentiate between a hobby and a business activity, the IRS considers various factors, such as the manner in which the taxpayer carries on the activity, their expertise, the time and effort they put into the activity, and the history of income or losses with respect to the activity.
Regarding the other options: A is incorrect since some hobby expenses can be deductible up to the amount of hobby income; C is incorrect as hobbies are not always presumed to be profit motivated; D is incorrect because Internal Revenue Code and regulations do provide guidance for determining whether an activity is profit-motivated.