Sheila has a second home being used as rental property. Her tenant moved out near the end of last year. She has been renting the home for $1,750 per month for the last few years. Sheila's friend, Barry, needed a place to live as he was recently divorced. Sheila agreed to let Barry live there for the next 12 months if he paid enough to cover the mortgage. The mortgage is $1,000 per month. Barry lived in the house and paid, as agreed, for the entire year. How would Sheila report her rental income and expenses? a) Report $12,000 as rental income on Schedule E, Part I, and then report the rental expenses on Schedule E, Part II. b) Sheila doesn't have to report the income or expenses since it was rented to a friend. C) Report $12,000 as other income on Form 1040, line 21, and report the deductible expenses limited to the rental income on Schedule A, line 23. d) Report $12,000 on Form 1040, line 21, and none of the expenses would be deductible