penny, a full-time biochemist, loves stock car racing. to feed her passion, she bought a used dirt - track car and has started entering some local dirt - track races. the prize money is pretty small ($1000 for the winner ),but she rely is not in it for the money. penny reported the following income and expenses from her nights at the track: prize money $2500 expenses : transportation from her to the races $1000 depreciation on the dirt - track car $4000 entry fee - $3500 oil, gas, supplies, repairs for the dirt - track car - $2050 calculate penny's deduction for the racing expenses assuming that the racing activity is a hobby, and penny's AGI is $97500 before considering the prize money