Priscella Pursued a Hobby of Making Bedspreads in Her Spare

question 139

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:

Community Ecology

The description and analysis of patterns and processes within the community.

Biological Community

An assemblage of different species living in the same area, which interact with each other.

Abiotic Environment

The abiotic environment encompasses all nonliving factors like climate, soil, water, and air, that affect ecosystems and the organisms within them.

Ecological Niche

The role and position a species has in its environment, including all its interactions with the biotic and abiotic factors.