Jenna Leigh is employed as a receptionist for a CPA firm, but on evenings and weekends, she bakes wedding cakes. In each of the past four years, Jenna's baking activity resulted in a net profit. This year, the activity generated a $720 net loss. Which of the following statements is true?
A. Jenna is allowed to report her $720 loss as an itemized deduction.
B. The legal presumption is that Jenna's $720 loss is a business loss.
C. Jenna must include the revenues from her baking activity in gross income but can't deduct any of her related expenses.
D. The legal presumption is that Jenna's $720 loss is a nondeductible hobby loss.
Answer: B
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