Priscella Pursued a Hobby of Making Bedspreads in Her Spare

question 12

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 $10,000 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:

Middle Managers

Middle managers are individuals who oversee the day-to-day operations of a company and are responsible for executing the organization's strategic plans, acting as a link between senior management and frontline employees.

Security

Security is the state of being free from danger or threat, often achieved through preventative measures.

Frederick Taylor

Known as the father of scientific management, he revolutionized industry by developing efficiency techniques and systems for improving productivity.

Production

The process of creating, manufacturing, or producing goods and services.