Penny, a full-time biochemist, loves stock car racing

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 $4,320 Expenses: Transportation from her home to the races 1,480 Depreciation on the dirt-track car 4,580 Entry fees 4,500 Oil, gas, supplies, repairs for the dirt-track car 2,330 What are the tax effects of Penny’s racing income and expenses assuming that the racing activity is a hobby for Penny? Penny racing income Panny racing expense Gross income for taxes

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