Priscella Pursued a Hobby of Making Bedspreads in Her Spare

question 21

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:
Supplies
$4,000
Interest on loan to get business started
500
Advertising
6,500
​
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:

Main Connective

The primary logical operator in a logical formula that determines the overall truth or falsity of the formula.

Atomic Statements

Simple, indivisible statements that express a single fact.

Main Components

Essential parts or elements of a system, mechanism, or compound that are critical to its function or structure.

Connectives

Logical operators used in logic and mathematics to connect two or more propositions or sentences to form a more complex statement.