Mario Paints Landscape Portraits, and He Treats the Activity as a Hobby

Mario paints landscape portraits, and he treats the activity as a hobby. During the current year, Mario incurred the following expenses while earning $2,500 from sales of paintings: Mario uses the standard deduction and never itemizes his deductions. How should Mario report all of the items related to his hobby on his tax return?

A) Hobby losses are not allowed so he couldn't deduct anything whether or not he itemizes anyway.
B) Report a $400 loss as a deduction for AGI.
C) Include $2,500 in gross income and deduct $2,500 for AGI.
D) Include $2,500 in gross income and deduct nothing for AGI.
E) Include $2,500 in gross income and deduct $1,700 for studio expenses.