Juanita Knits Blankets as a Hobby and Occasionally Sells Them

question 85

Multiple Choice

Juanita knits blankets as a hobby and occasionally sells them.In the current year,she earns $5,000 from her blanket sales and incurs expenses of $600.On her tax return,she should

• A)report $5,000 of hobby income and deduct $600 of hobby expenses from AGI.
• B)report $5,000 of hobby income and deduct $600 of hobby expenses for AGI.
• C)report $5,000 of hobby income,but she will not be able to take any deductions.
• D)report no hobby income and no hobby deductions.

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Definitions:

American Call Option

An options contract that allows the holder to buy the underlying asset at a specified price at any time before or on the expiration date.

Variance

A statistical measure that represents the dispersion of data points in a data set around the mean, indicating how spread out the data is.

American Call Option

An option contract that gives the holder the right, but not the obligation, to buy a security at a specified price before the option expires.

Expiration Date

The specified date on which an options or futures contract becomes null and void.