Darlene is employed full-time at the Albee Corporation. She considers herself a freelance author during the time she is not working at Albee. She has published a few articles with the first one being published in 2018. Over the following three years, Darlene spent a considerable amount of free time writing articles and submitting them to various magazines for publication. Some of her submissions have been accepted for publication and thus, she has received compensation for her articles. She has met with editors to discuss her ideas and seek their insight on how to improve her acceptance rate. To date, she has not shown a profit in any year. Darlene maintains a separate room in her house (10 ft. x 12 ft.) for the sole purpose of writing, and she deducted a pro-rata share of the utility bills and other home expenses. The room has a half bathroom attached (5 ft. x 6 ft.), which she has used occasionally. She incurred other expenses amounting to $4,000 in 2021 and wants to write them off in the current year. Darlene is requesting our firm’s assistance in preparing her 2021 tax return. In the past, she has not claimed the income or expenses associated with her writing career since she has not realized a profit. 

You are requested to prepare a tax memo to Darlene on her current tax situation and the services that our firm can provide to her.