Kerryn works full time as an employee accountant. She loves to sing and regularly records songs she wrote herself and posts them on YouTube. For the last three years she would on average spend approximately 20 hours a week on this activity. Because her cousin Joel owned a recording studio, she was able to use his recording facilities for free. Occasionally Kerryn would dream that one day she would be discovered as a star and could make enough money to retire from her job, though in reality Kerryn told herself that this was unlikely to happen. On average, Kerryn would post a new song on YouTube every two weeks.

Since Kerryn found quite a following (some of her songs had over 100,000 hits), in an attempt to profit from her new found fame, she auctioned some of her old clothes and jewellery online (that she had bought many years ago) and manages to sell them for $8,000.

Advise Kerryn on whether the $8,000 would constitute ordinary income.