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Question: in his spare time fred likes to restore old furniture...

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In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2017, he sells $500 worth of furniture and has $21,000 worth of expenses. Which one of the following is true?

a.Fred may deduct all $21,000 of his expenses because Fred is engaged in a trade or business.

b.Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobby.

c.Fred cannot deduct any of the expenses because he is engaged in a hobby.

d.Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby.

e.None of these choices are correct.

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