Priscella Pursued a Hobby of Making Bedspreads in Her Spare $\begin{array}{lr}\text { Supplies }&\$4,000\\\text { Interest on loan to get business started } & 500 \\\text { Advertising } & 6,500\end{array}$

Priscella pursued a hobby of making bedspreads in her spare time. Her AGI before considering the hobby is $40,000. During 2019 she sold the bedspreads for $10,000. She incurred expenses as follows: $\begin{array}{lr}\text { Supplies }&\$4,000\\\text { Interest on loan to get business started } & 500 \\\text { Advertising } & 6,500\end{array}$ Assuming that the activity is deemed a hobby, how should she report these items on her tax return?

A) Include $10,000 in income and deduct $11,000 for AGI.
B) Ignore both income and expenses since hobby losses are disallowed.
C) Include $10,000 in income, deduct nothing for AGI, and claim $11,000 of the expenses as itemized deductions.
D) Include $10,000 in income and deduct nothing.
E) None of these.