I have a question regarding Hobby Income / Expenses:
Say I spent $3000 on painting supplies, $1000 of which went toward paintings I sold, and the other $2000 went toward paintings I gave as gifts to friends and family members. In the meantime, I made $1800 on the ones I sold.
(speaking before the 2% floor)
Can I only deduct the $1000 expenses that went towards the paintings I sold, or can I deduct $1800 of expenses to offset the full $1800 I made in profit?