Problem
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:
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Prize money
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$2,700
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Expenses:
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Transportation from her home to the races
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1,740
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Depreciation on the dirt-track car
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5,640
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Entry fees
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6,000
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Oil, gas, supplies, repairs for the dirt-track car
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2,860
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Calculate Penny's deduction for the racing expenses assuming that the racing activity is a hobby, and Penny's AGI is $98,100 before considering the prize money.