37. Peter operates a dental office in his home. The office occupies 250 square feet of his residence, which is a total of 1,500 square feet. During 2021, Peter pays rent for his home of $12,000, utilities of $4,800, and maintenance expenses of $1,200. What amount of the total expenses should be allocated to the home office? A) $0 B) $2,000 C) $3,000 D) $2,500 E) None of these choices are correct. 38. Richard operates a hair styling boutique out of his home. The boutique occupies 420 of the home's 1,200 square feet of floor space. What amount of income or loss from the boutique should Richard show on his return, based on the information below? A) \$1,300 income B) $10,400 loss C) \$0 income or loss D) $3,500 income E) None of these choices are correct. 39. In his spare time, Fred likes to restore old furniture and sell it to his friends. He is a lawyer by trade. During 2021 , he sells $7,500 worth of furniture and has $21,000 worth of marketing and equipment rental expenses. Which one of the following is true? A) Fred cannot deduct any of the expenses because he is engaged in a hobby. B) Fred's deductions are limited to the income from selling furniture because he is engaged in a hobby. C) Fred may deduct all $21,000 of his expenses because Fred is engaged in a hobk D) Fred may deduct all $21,000 of his expenses because Fred is engaged in a trad or business. E) None of these choices are correct