12. Grace paints pictures as a hobby and often gives them to her family as gifts. Family

members also buy them to give to others. Grace earned $2,250 selling paintings. Her

expenses are as follows:

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

$ 679

850

1,200

1,450

350

450

980

What is the amount Grace should report as hobby expense on Schedule A before applying

the limit?

a)

b)

c)

d)

$2,229

$2,250

$5,959

$

0

13. Natalie had an AGI of $70,000 and the following 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)

b)

c)

d)

$1,554

$1,400

$1,152

$

0

14. Sarah wants to start a Coverdell ESA for her grandson’s education.

taxpayer establish a Coverdell ESA?

a)

b)

c)

d)

Where should a

At the IRS

A local loan company

Any bank in the U.S.

An online loan company