Juanita knits blankets as a hobby and sells them. In the current year, she earns $5,000 from her blanket sales and incurs expenses of $600. On her tax return, she should
A. report no hobby income and no hobby deductions.
B. report $5,000 of hobby income and deduct $600 of hobby expenses for AGI.
C. report $5,000 of hobby income, but she will not be able to take any deductions.
D. report $5,000 of hobby income and deduct $600 of hobby expenses from AGI.
Answer: C
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