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?
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 interest of $500 for AGI.
E)None of the above.

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?
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 interest of $500 for AGI. 
E)None of the above.

Quizplus · Accepted Answer

The Answer of 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?
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 interest of $500 for AGI. 
E)None of the above.

Priscella Pursued a Hobby of Making Bedspreads in Her Spare