In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2011, he sells $500 worth of furniture and has $21,000 worth of expenses. Which one of the following is true? Answer Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobby. Fred may deduct all $21,000 of his expenses because Fred is engaged in a trade or business. Fred cannot deduct any of the expenses because he is engaged in a hobby. Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby. None of the above is true