Abigail's hobby is sculpting. During the current year, Abigail sold three of her sculptures for a total of $3,200. Her related expenses include $1,500 for utilities, $1,200 for supplies and $900 of depreciation on her pottery wheel.
What is the limitation on the amount of expenses Abigail can deduct prior to any limitations based on AGI?
If Abigail’s AGI is $45,000, how much of the expenses are allowable and which of the expenses will she deduct?
Where, on the tax return, does Abigail report the income and expenses?
If there are any expenses that Abigail cannot deduct this year based on limitations, can Abigail carry those unused deductions forward to future years?
How much of the depreciation is utilized to reduce the basis in her pottery wheel?