Marissa is a talented knitter and decides to turn her hobby into a business. Marissa is successful and generates $8,900 worth of income while incurring $3,245 worth of hobby expenses. Is Marissa able to deduct her hobby expenses in 2018? Why or why not?
If Marissa earn income in the pursuit of a hobby, she can offset the income with deductions but she cannot claim deductions that exceed her income. Remember, there’s no loss for a hobby.
In this case, Marissa converted her hobby into business. So she can deduct all expenses relating to that business without any limit as specified for hobby(that is deduction shall not exceed income generated from that hobby).
So she can deduct whole expense of $3245 as business expense(Because she converted hobby into business).
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