Alex, who is single, conducts an activity in 2016 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 and his personal exemption is $4,050.
Complete the following statements regarding the treatment of the hobby activities.
- Excluding the property taxes, his total deductible expenses (before any AGI limitations) is limited to $ _____________.
- Alex's reportable net income from the hobby on his tax return is $_______________ and his overall taxable income is $_________________.