Steven is an accountant and maintains an office in his home. Expenses of the business (other than home office expenses) are $15,000. Steven incurs the following home office expenses: Real property taxes on residence: $2,400 Interest expense on residence: $4,000 Operating expenses of residence: $3,200 Depreciation on residence (based on 8% business use): $450. His office occupies 10% of the total floor space of his residence. Gross income from his business is $34,000. Assuming that Steven uses the regular method, what is his allowable office in the home deduction?

Steven is an accountant and maintains an office in his home. Expenses of the business (other than home office expenses) are $15,000. Steven incurs the following home office expenses: Real property taxes on residence: $2,400 Interest expense on residence: $4,000 Operating expenses of residence: $3,200 Depreciation on residence (based on 8% business use): $450. His office occupies 10% of the total floor space of his residence. Gross income from his business is $34,000. Assuming that Steven uses the regular method, what is his allowable office in the home deduction?

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter3: Business Income And Expenses

Section: Chapter Questions

Problem 20MCQ

See similar textbooks

Similar questions

Ray, 83, is a used car dealer. He lives in a rural community and operates the business out of his home. One room in his 6-room house is used exclusively for his business office. He parks the cars in his front yard, and when customers come along, they sit on the front porch and negotiate a sale price. The income statement for Rays auto business is as follows: If Rays home were rental property, the annual depreciation would be 2,900. The utilities and upkeep on the home cost Ray 6,400 for the year. Rays mortgage interest for the year is 2,400. When asked about the loan fees, Ray bitterly responds that Jim, the bank loan officer, charges him 10 percent of his gross profit on cars financed through the bank. Ray says, The money is under the table, and if I dont shell out the cash, Jim wont loan the money to my customers to buy my cars. Everybody goes to Jimhes got the cash. Write a letter to Ray explaining the proper treatment of this information on his tax return.
Sabin is an artist and maintains an office (his studio) in his home. His office occupies 8% of the total floor space of his residence. Gross income from his business is $24,000. Expenses of the business (other than home office expenses) are $5,000. Sabin incurs the following home office expenses: Real property taxes on residence: $2,400 Interest expense on residence: $4,000 Operating expenses of residence: $2,200 Depreciation on residence (based on 8% business use): $450. A) Assuming Sabin uses the "regular method" to compute the office in the home deduction, his deduction is ? B) Assuming Sabin uses the "simplifed method" to computer the office in the home deduction, his deduction is?
Sabin is an artist and maintains an office (his studio) in his home. His office occupies 8% of the total floor space of his residence. Gross income from his business is $24,000. Expenses of the business (other than home office expenses) are $5,000. Sabin incurs the following home office expenses: Real property taxes on residence: $2,400 Interest expense on residence: $4,000 Operating expenses of residence: $2,200 Depreciation on residence (based on 8% business use): $450. Assuming Sabin uses the "regular method" to compute the office in the home deduction, his deduction is
Sabin is an artist and maintains an office (his studio) in his home. His office occupies 8% (200 square feet) of the total floor space of his residence. Gross income from his business is $24,000. Expenses of the business (other than home office expenses) are $5,000. Sabin incurs the following home office expenses: Real property taxes on residence: $2,400 Interest expense on residence: $4,000 Operating expenses of residence: $2,200 Depreciation on residence (based on 8% business use): $450. Assuming Sabin uses the "simplified method" to compute the office in the home deduction, his deduction is
Cindy, who is self-employed, maintains an office in her home that comprises 10% (340 square feet) of total floor space. Gross income for her business is $54,650, and her residence expenses are as follows: Real property taxes $4,092 Interest on mortgage 6,820 Operating expenses 3,410 Depreciation (based on 10% business use) 8,075 a. What is Cindy's office in the home deduction based on the regular method? b. What is Cindy's office in the home deduction based on the simplified method?
Dennis is a self-employed hair stylist who operates a salon in his home. The property taxes and interest allocated to the business amount to $5,000, maintenance and utilities allocated to the business total $2,100, and depreciation allocated to the business use of the home equals $3,100 for the current tax year. a. If Dennis' gross revenue after deducting supplies for his business is $5,900 for the current tax year, calculate his allowable deductions for the home office. b. If Dennis' gross revenue after deducting supplies for his business is $13,800, calculate his allowable deductions for the home office.
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 $6,000. 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 $ 1,800 Interest on home mortgage 5,400 Operating expenses of home 900 Depreciation 1,720 Also, assume that, not counting the sole proprietorship, Rita's AGI is $64,000. 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 $16,000 in gross income. a. What is Rita’s home office deduction for the current year?
Jayda, who is self-employed, maintains an office in her home that comprises 16% (370 square feet) of total floor space. Gross income for her business is $44,150, and her residence expenses are as follows: Real property taxes Interest on mortgage Operating expenses Depreciation (based on 16% business use) If required, round your final answer to the nearest dollar. a. What is Jayda's office in the home deduction based on the regular method? $ $4,860 8,100 4,050 6,395 b. What is Jayda's office in the home deduction based on the simplified method?
Jayda, who is self-employed, maintains an office in her home that comprises 26% ( 360 square feet) of total floor space. Gross income for her business is $45,650, and her residence expenses are as follows: Real property taxes Interest on mortgage Operating expenses Depreciation (based on 26% business use) If required, round your final answer to the nearest dollar. a. What is Jayda's office in the home deduction based on the regular method? 9,595 X Feedback $4,764 7,940 3,970 4,715 Check My Work Self-employed individuals are not allowed a deduction for office in the home expenses unless a portion of the residence on a regular basis under certain circumstances. b. What is Jayda's office in the home deduction based on the simplified method? 1,100 X
Rita owns a sole proprietorship in which she works as a management consultant. She maintains an officein 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 $5,600. The followinghome-related expenses have been allocated to her home office under the actual expense method forcalculating home office expenses. Real property taxes $ 1,600Interest on home mortgage 5,100Operating expenses of home 800Depreciation 1,600 Also, assume that, not counting the sole proprietorship, Rita AGI is $60,000. Rita itemizes deductions,and her itemized deduction for non-home business taxes is less than $10,000 by more than the realproperty taxes allocated to business use of the home.Assume Rita’s consulting business generated $15,000 in gross income. a. What is Rita's home office deduction for the current year? b. What would Rita's home office deduction be if her business generated…
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 $6,080. 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 $ 1,840 Interest on home mortgage 5,460 Operating expenses of home 920 Depreciation 1,744 Also, assume that, not counting the sole proprietorship, Rita's AGI is $64,800. 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 $16,200 in gross income. Note: Leave no answer blank. Enter zero if applicable. Required: What is Rita's home office deduction for the current…
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 $5,600. 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 $ 1,600 Interest on home mortgage 5,100 Operating expenses of home 800 Depreciation 1,600 Also, assume that, not counting the sole proprietorship, Rita's AGI is $60,000. 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 $13,000 in gross income for the current year. Further, assume Rita uses the actual expense method for computing her home office expense…