Les has collected stamps in his spare time for years. He purchased many of his stamps at a price much lower than current market value. Les recently lost his job as a carpenter. Since his wife works full time, he decides to start an internet-based stamp store. He sold $7,000 worth of stamps in 2016 and reported the following expenses:

Supplies $ 2,000

Equipment rental 1,500

Web assistance 2,500

Office rental 750

Advertising 700

AGI without considering the effect of the stamp operation income or expenses is $100,000. What is the effect of the income and expenses described above on AGI and itemized deductions (if any) if the business is classified as a:

a. Hobby?

b. Business?

what's the difference between the two? thank you