Bill paints portraits and treats the activity as a hobby. This year he had $2,500 of income from painting sales, and spent the following amounts:

Easel $ 400

Brushes $ 550

Paint $1,300

Canvases $ 300

Advertising $ 175

Studio Rental $ 600

Assuming all the supplies were used up in the paintings he sold, how should Bill report his hobby income and expense on this years tax return?

Group of answer choices

Include $2,500 in income, deduct $ - 0 -

Do not include any of the income or expenses

Include $900 in income, deduct $ - 0

Include $2,500 in income, deduct $2,500 for AGI

Include $900 in income, deduct $175