Mario paints landscape portraits, and he treats the activity as a hobby. During the current year, Mario incurred the following expenses while earning $2,500 from sales of paintings:
?
$$\begin{array} { l r }
\text { Paints and supplies } & \$ 2,200 \
\text { Utiliti es expenses for his studio } & 1,000 \
\text { Advertising } & 300 \
\text { Insurance on his studio and equipment } & 700
\end{array}$$
Mario uses the standard deduction and never itemizes his deductions. How should Mario report all of the items related to his hobby on his tax return?

Question

Mario paints landscape portraits, and he treats the activity as a hobby. During the current year, Mario incurred the following expenses while earning $2,500 from sales of paintings:
?
$$\begin{array} { l r } 
\text { Paints and supplies } & \$ 2,200 \
\text { Utiliti es expenses for his studio } & 1,000 \
\text { Advertising } & 300 \
\text { Insurance on his studio and equipment } & 700
\end{array}$$
Mario uses the standard deduction and never itemizes his deductions. How should Mario report all of the items related to his hobby on his tax return?

Quizplus · Accepted Answer

Since Mario treats the activity as a hobby, he cannot deduct expenses in excess of hobby income. Therefore, he should include the $2,500 in gross income and deduct nothing. The standard deduction does not apply to hobby expenses.

Mario Paints Landscape Portraits, and He Treats the Activity as a Hobby