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Problem $6-37($LO $6-2)($Algo$)$

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$ $3,580$Expenses:$$Transportation from her home to the races$1,630$Depreciation on the dirt$-$track car$4,180$Entry fees$3,200$Oil, gas, supplies, repairs for the dirt$-$track car$2,350$

What are the tax effects of Penny's racing income and expenses assuming that the racing activity is a hobby for Penny?