Alex, who is single, conducts an activity in 2014 that is appropriately classified as a hobby. The activity produces the following revenues and expenses:

Revenue                                             $18,000
Property taxes                                       3,000
Materials and supplies                          4,500
Utilities                                                  2,000
Advertising                                            5,000
Insurance                                                 750
Depreciation                                          4,000

Without regard to this activity, Alex’s AGI is $42,000. Determine the amount of income Alex must report, the amount of the expenses he is permitted to deduct, and his taxable income.