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 ($1,000 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 |
$2,500 |
| Expenses: |
|
| Transportation from her home to the races |
1,000 |
| Depreciation on the dirt track car |
4,000 |
| Entry fees |
3,500 |
| Oil, gas, supplies, repairs for the dirt track car |
2,050 |
Calculate Penny's deduction for the racing expenses assuming that the racing activity is a hobby, and Penny's AGI is $97,500 before considering the prize money.