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 ($1,000 for the winner), but she really is not in it for the money. Penny reported the following income and expenses from her nights at the track:

Prize money	$3,560
Expenses:
Transportation from her home to the races	1,530
Depreciation on the dirt-track car	4,380
Entry fees	4,800
Oil, gas, supplies, repairs for the dirt-track car	2,590

What are the tax effects of Pennys racing income and expenses assuming that the racing activity is a hobby for Penny?

Prize money	$3,560
Expenses:
Transportation from her home to the races	1,530
Depreciation on the dirt-track car	4,380
Entry fees	4,800
Oil, gas, supplies, repairs for the dirt-track car	2,590

What are the tax effects of Pennys racing income and expenses assuming that the racing activity is a hobby for Penny?

Prize money	$3,560
Expenses:
Transportation from her home to the races	1,530
Depreciation on the dirt-track car	4,380
Entry fees	4,800
Oil, gas, supplies, repairs for the dirt-track car	2,590

What are the tax effects of Pennys racing income and expenses assuming that the racing activity is a hobby for Penny?

Penny's racing income?

Penny's racing expense?

Gross income for tax?