11. Russ rented a house to his best friend's daughter, Diana (a not-for-profit renta). The fair market rental of the house was $850 per month; however, Russ rented the house to Diana for $500 per month. Diana rented the house for the entire year. Russ AGI is $45,000 He had expenses as follows: Mortgage interest $4,200 Repairs 3.100 $1,050 $3,850 S 325 Insurance Real estate taxes What is the amount of rental expense Russ may deduct on his return? a) $12,525 b) 9425 c) 6,000 d) 8,675 12. Grace paints pictures as a hobby and often gives them to her family as gifts. Famly members also buy them to give to others. Grace earned $2,250 selling paintings. Her expenses are as folows Paints for paintings she sold Paints for paintings she gave as gifts Canvas for paintings she sold Canvas for the paintings she gave as gifts Brushes for the paintings she sold Brushes for the paintings she gave as gifts Frames for the paintings she gave as gifts S 679 850 1,200 1,450 350 450 980 What is the amount Grace should report as hobby expenses on Schedule A before applying the imit? a) $2.229 b) $2 250 c) $5,959 d) $0 13. Natalie had an AGI of $70,000 and the folowing miscellaneous itemized deductions Employee business expenses Tax preparation fees Investment expenses $898 154 100 What is the amount of Natalie's miscellaneous itemized deductions on line 27. Schedule A? a) $1,554 b) $1,400 c) $1,152 d) 0 14. Sarah wants to start a Coverdell ESA for her grandson's education Where should a taxpayer establish a Coverdell ESA? a) At the IRS b) A local loan company c) Any bank in the US d) An online loan company