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 Expenses: Transportation from her home to the races Depreciation on the dirt-track car Entry fees Oil, gas, supplies, repairs for the dirt-track car $ 2,500 1,000 4,000 3,500 2,050 What are the tax effects of Penny's 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