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

Since the activity is deemed a hobby, Priscella cannot deduct the expenses from her AGI. However, she can include the income from the sale of bedspreads ($10,000) in her income. She can also claim up to $10,000 of the hobby expenses as itemized deductions on Schedule A.

Priscella Pursued a Hobby of Making Bedspreads in Her Spare