Question 40 of 75. Lynette loves to spend her free time knitting. She recently decided to start selling her hand knitted shawls to friends and family. She does this for recreation, not to make a profit. How will Lynette report the income from this activity? Lynette does not report the income since it is not considered a for-profit business. Lynette will report the income in excess of expenses on Schedule 1 (Form 1040), Part I, line 8z. Lynette will report the income on Schedule 1 (Form 1040), Part I, line 8i. The income won't be subject to self-employment tax. Lynette will report as gross income on Part I of Schedule C (Form 1040).