Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,880. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes Interest on home mortgage Operating expenses of home Depreciation $ 1,740 5,310 870 1,684 Also, assume that, not counting the sole proprietorship, Rita's AGI is $62,800. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita's consulting business generated $15,700 in gross income. Note: Leave no answer blank. Enter zero if applicable. d. Given the original facts, what types and amounts of expenses will she carry over to next year? Tier 1 expenses carried over to next year Tier 2 expenses carried over to next year Tier 3 expenses carried over to next year
Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,880. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes Interest on home mortgage Operating expenses of home Depreciation $ 1,740 5,310 870 1,684 Also, assume that, not counting the sole proprietorship, Rita's AGI is $62,800. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita's consulting business generated $15,700 in gross income. Note: Leave no answer blank. Enter zero if applicable. d. Given the original facts, what types and amounts of expenses will she carry over to next year? Tier 1 expenses carried over to next year Tier 2 expenses carried over to next year Tier 3 expenses carried over to next year
Chapter2: Income Tax Concepts
Section: Chapter Questions
Problem 26P
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Domestic
Transcribed Image Text:Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500
square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses,
other than home office expenses, total $5,880. The following home-related expenses have been allocated to her home
office under the actual expense method for calculating home office expenses.
Real property taxes
Interest on home mortgage
Operating expenses of home
Depreciation
$ 1,740
5,310
870
1,684
Also, assume that, not counting the sole proprietorship, Rita's AGI is $62,800. Rita itemizes deductions, and her itemized
deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business
use of the home.
Assume Rita's consulting business generated $15,700 in gross income.
Note: Leave no answer blank. Enter zero if applicable.
d. Given the original facts, what types and amounts of expenses will she carry over to next year?
Tier 1 expenses carried over to next year
Tier 2 expenses carried over to next year
Tier 3 expenses carried over to next year
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