Penny, a full-time biochemist, loves stock car racing. To feed her passion, she bought a used dirt-track car and has started entering some local dirt-track races. The prize money is pretty small ($1,000 for the winner), but she really is not in it for the money. Penny reported the following income and expenses from her nights at the track: Prize money $4,320 Expenses: Transportation from her home to the races 1,480 Depreciation on the dirt-track car 4,580 Entry fees 4,500 Oil, gas, supplies, repairs for the dirt-track car 2,330 What are the tax effects of Penny’s racing income and expenses assuming that the racing activity is a hobby for Penny? Penny racing income Panny racing expense Gross income for taxes
Penny, a full-time biochemist, loves stock car racing. To feed her passion, she bought a used dirt-track car and has started entering some local dirt-track races. The prize money is pretty small ($1,000 for the winner), but she really is not in it for the money. Penny reported the following income and expenses from her nights at the track: Prize money $4,320 Expenses: Transportation from her home to the races 1,480 Depreciation on the dirt-track car 4,580 Entry fees 4,500 Oil, gas, supplies, repairs for the dirt-track car 2,330 What are the tax effects of Penny’s racing income and expenses assuming that the racing activity is a hobby for Penny? Penny racing income Panny racing expense Gross income for taxes
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Penny, a full-time biochemist, loves stock car racing. To feed her passion, she bought a used dirt-track car and has started entering some local dirt-track races. The prize money is pretty small ($1,000 for the winner), but she really is not in it for the money. Penny reported the following income and expenses from her nights at the track:
| Prize money | $4,320 |
| Expenses: | |
| Transportation from her home to the races | 1,480 |
| 4,580 | |
| Entry fees | 4,500 |
| Oil, gas, supplies, repairs for the dirt-track car | 2,330 |
|
|
What are the tax effects of Penny’s racing income and expenses assuming that the racing activity is a hobby for Penny?
Penny racing income
Panny racing expense
Gross income for taxes
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