Katie operates a ceramics studio from her garage. She incurs the following expenses:
Katie's gross receipts from her business were $2,000.
a. If the studio is deemed to be a hobby, then calculate the amount of expenses Katie may deduct, and describe how she may report the income and expenses on her tax return.
b. If the studio is not a hobby, then calculate the amount of expenses Katie may deduct, and describe how she may report the income and expenses on her tax return.

Question

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The Answer of Katie operates a ceramics studio from her garage. She incurs the following expenses:
Katie's gross receipts from her business were $2,000.
a. If the studio is deemed to be a hobby, then calculate the amount of expenses Katie may deduct, and describe how she may report the income and expenses on her tax return.
b. If the studio is not a hobby, then calculate the amount of expenses Katie may deduct, and describe how she may report the income and expenses on her tax return.

Katie Operates a Ceramics Studio from Her Garage