Manjula Nahasapeemapetilon hand sews and stitches ghagra cholis lehengas as a hobby and sells them. In the current year, she earns $40,000 (net of COGS) from her lehengas sales and incurs marketing expenses of $5,000. Manjula does not itemize deductions. On her tax return, she should

A.report no hobby income and no hobby deductions.

B.report $40,000 of hobby income and deduct nothing from AGI.

C.report $40,000 of hobby income and deduct $5,000 of hobby expenses from AGI.

D.report $40,000 of hobby income and deduct $5,000 of hobby expenses for AGI.

E.report $35,000 of hobby income.