Final answer:
Virginia can deduct $11,000 of her expenses from the hobby activity because that is the total income she earned from it, even though her actual expenses totaled $17,500.
Step-by-step explanation:
The expenses that Virginia incurs from her hobby can only be deducted up to the amount of income she earns from that hobby. Since she earns $11,000 from the sale of her rare orchids, she can only deduct expenses up to that amount. Let's calculate the total expenses for her hobby: property taxes ($4,500), seeds/fertilizer/sprays ($8,000), and depreciation ($5,000), totaling $17,500.
However, she can only deduct $11,000, the amount of income from the hobby. Therefore, $11,000 of her expenses can be deducted.In order to determine how much of the expenses can be deducted by Virginia, we need to calculate the total expenses she incurs. From the given information, her expenses include:Property taxes on the structures: $4,500Seeds, fertilizer, and bug sprays: $8,000Depreciation on the structures: $5,000To calculate the total expenses, we add up these amounts: $4,500 + $8,000 + $5,000 = $17,500. Therefore, Virginia can deduct $17,500 as expenses.