In His Spare Time, Fred Likes to Restore Old Furniture

In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2014, he sells $500 worth of furniture and has $21,000 worth of expenses. Which one of the following is true?

A) Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobby.
B) Fred may deduct all $21,000 of his expenses because Fred is engaged in a trade or business.
C) Fred cannot deduct any of the expenses because he is engaged in a hobby.
D) Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby.
E) None of the above.