Problem (10 points). Louise is single and a IT manager for the phone company. She also owns and operates a sports memorabilia store. Louise goes to shows, subscribes to numerous magazines on sports memorabilia and maintains a Website on the Internet. She has been engaged in the activity for the last 5 years. During that time, she reported a net loss in two of the years and net income in the other three. Overall, her sports memorabilia activity has shown a slight loss, but the value of her collection over the 5 years has increased by 20%. Louise rents a 600 square foot storefront for $500 a month. Although the store is open only on Saturdays, she is usually in her office at the store 2 or 3 nights a week buying and selling sports memorabilia over the Internet. For the current year, she has an adjusted gross income of $42,000 before considering the attached income and expenses related to her sports memorabilia activity. REQUIRED: (1) (2) If Louise is considered to be engaged in a trade or business with her sports memorabilia activity, determine the income and deductions that she would report on her tax return related to this trade or business. If Louise is considered to be engaged in a hobby with her sports memorabilia activity, determine the income and deductions that she would report on her tax return related to this hobby. What factors (e.g., facts, aspects) of Louise's sports memorabilia activity indicate that it is a hobby? What factors would indicate that it is a trade or business? Explain fully. (3) TAXPAYER LOUISE INFORMATION RELATED TO SPORTS MEMORABILIA ACTIVITY FOR TAX YEAR 2020 Sale of memorabilia 11,500 Cost of memorabilia sold 3,725 Cost of memorabilia purchased 1,500 Registration and booth fees 750 Transportation to memorabilia shows 600 Meals attending shows 250 Cost of trade journals related to sports memorabilia 280 Cost of internet connection 240 Office utilities 800 Telephone 400 Depreciation on computer 200