LO.3 Sandra, an orthodontist, is single and has net earnings of $90,000 from her practice.

In addition, she collects antique books that she buys and sells at antique shows. She participates in six to eight weekend shows per year. Her income and expenses for the current year are as follows:

Revenue from sale of antique books $22,000 Expenses Cost of goods sold 12,000 Show registration costs 3,000 Advertising 1,000 Dealer’s license—annual fee 500 Insurance 900 Depreciation of display cases 1,200 Sandra has no other items that would affect her AGI. Itemized deductions consisting of taxes, interest, and charitable contributions are $19,000. Calculate Sandra’s taxable income if the antique book activity is classified as:

a. A hobby.

b. A business.