Question: Eric, who is single, participates in an activity that is appropriately classified as a hobby. The activity produces the following revenue and expenses: Revenue ..$12,000

Eric, who is single, participates in an activity that is appropriately classified as a hobby. The activity produces the following revenue and expenses:
Revenue ……………………………………..$12,000
Property taxes ………………………………. 2,000
Materials and supplies ……………………… 4,000
Utilities ……………………………………... 1,500
Advertising ……………………………….... 1,900
Insurance ………………………………....... 775
Depreciation ………………………………... 5,000
Without regard to this activity, Eric’s AGI is $55,000. Determine how much income Eric must report, the amount of the expenses he is permitted to deduct, and his AGI:

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