3- Rachel operates a fine china boutique out of her home. The boutique occupies 420 of the homes 1,200 square feet of floor space. Other information is as follows:

Gross income from the boutique	$10,000
Supplies for the boutique	$2,400
Depreciation on total residence	$12,000
Utilities for total residence	$6,000

What amount of income or loss from the boutique should Rachel show on her return? Please note that Rachel will not use the home office "safe harbor" method.

a-$10,400 loss b-$1,300 income c-$3,500 income d-$0 income or loss e-None of the above