Stewie, a single taxpayer, operates an activity as a hobby. Brian, a different taxpayer, operates a similar activity as a bona fide business. Stewies gross income from his activity is $5,000 and his expenses are $6,000. Brians gross income and expenses are coincidentally the same as Stewie. Neither Stewie nor Brian itemize but both have other forms of taxable income. What is the impact on taxable income for Stewie and Brian from these activities?

a. Stewie will report $0 income and Brian will report a $1,000 loss.

b. Stewie will report $5,000 income and $5,000 as a miscellaneous itemized deduction and Brian will report a $1,000 loss.

c. Stewie and Brian will report $0 taxable income.

d. Stewie and Brian will report a $1,000 loss.

e. Stewie will report a $1,000 loss and Brian will report $5,000 income.

Please show all calculations and explain why you chose your answer. Thank you.