Kelsey enjoys making cupcakes as a hobby and occasionally sells them for parties. Kelsey receives $1,000 in revenues from cupcake sales this year and pays $1,300 for supplies. Kelsey takes the standard deduction each year. The net effect of the cupcake activity on Kelsey's taxable income is
A) $0.
B) an increase of $1,000.
C) a decrease of $300.
D) a decrease of $280.
B) an increase of $1,000.
Expenses related to activity classified as a hobby are not deductible so her taxable income will include the full $1,000 revenue.
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