Priscella pursued a hobby of making bedspreads in her spare time.Her AGI before considering the hobby is $40,000.During the year she sold the bedspreads for $10,000.She incurred expenses as follows: Assuming that the activity is deemed a hobby, how should she report these items on her tax return?

Question

Priscella pursued a hobby of making bedspreads in her spare time.Her AGI before considering the hobby is $40,000.During the year she sold the bedspreads for $10,000.She incurred expenses as follows:  Assuming that the activity is deemed a hobby, how should she report these items on her tax return?

Quizplus · Accepted Answer

According to the IRS, if an activity is deemed a hobby, any income from it should be reported as "Other Income" on the tax return, and expenses can only be claimed as itemized deductions and only up to the amount of income earned from the hobby. Therefore, Priscella should include the $10,000 of income on her tax return, not deduct any expenses for AGI, and claim up to $10,000 of the expenses as itemized deductions.

Priscella Pursued a Hobby of Making Bedspreads in Her Spare