Priscella Pursued a Hobby of Making Bedspreads in Her Spare

question 2

Multiple Choice

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?

• A)Include $10,000 in income and deduct $11,000 for AGI.
• B)Ignore both income and expenses since hobby losses are disallowed.
• C)Include $10,000 in income,deduct nothing for AGI,and claim $11,000 of the expenses as itemized deductions.
• D)Include $10,000 in income and deduct interest of $500 for AGI.
• E)None of the above.

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Definitions:

Distribution

Refers to the way in which something is spread or dispensed across a range of values or over a geographic area.

Class Interval

A range of values within which a variable can be categorized in the distribution of data.

Distribution

The way in which something is shared or spread out over a range, often referring to the distribution of values in a set of data.

Frequency Polygon

A graphical representation of the distribution of a dataset. It shows the frequencies of classes or intervals of data as points, which are connected by line segments.