Priscella pursued a hobby of making bedspreads in her spare time. Her AGI before considering the hobby is $40,000. During 2021 she sold the bedspreads for $10,000. She incurred expenses as follows: Supplies Interest on loan to get business started Advertising $4,000 500 Assuming that the activity is deemed a hobby, how should she report these items on her tax return? 6,500 Include $10,000 in income and deduct nothing. Include $10,000 in income, deduct nothing for AGI, and claim $11,000 of the expenses as itemized deductions. Capitalize $23,000. O Expense $23,000 for 2018. Include $10,000 in income and deduct $11,000 for AGI. O Ignore both income and expenses since hobby losses are disallowed. Capitalize $14,000 and not deduct $9,000. Expense $9,000 for 2018 and capitalize $14,000. Iris, a calendar year cash basis taxpayer, owns and operates several TV rental outlets in Florida, and wants to expand to other states. During 2021, she spends $14,000 to investigate TV rental stores in South Carolina and $9,000 to investigate TV rental stores in Georgia. She acquires the South Carolina operations, but not the outlets in Georgia. As to these expenses, Iris should: