Problem $6-37($LO $6-2)($Algo$)$

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 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

$$3,540$

$1,860$

$4,660$

$3,900$

$2,520$

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