Priscella Pursued a Hobby of Making Bedspreads in Her Spare

question 13

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:

Geographic Component

Elements related to or determined by the physical location, features, and spatial relationships on Earth.

Interpersonal Relations

The interactions and associations between two or more people, including relationships of all forms.

Equity Theory

A concept in social psychology that posits individuals assess their relationships by analyzing the balance between their inputs (such as effort, time, money) and the outcomes (rewards, recognition) they receive, compared to others.

Tragedy of the Commons

Describes a situation where individual users, acting independently according to their own self-interest, deplete or spoil shared resources, leading to long-term consequences for the whole group.