Colin, a self-employed consultant, uses a room of his home as a business office. This room represents
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Home mortgage interest …………………………$12,980
Property tax on residence ………………………… 2,200
Homeowner’s insurance ………………………… 1,475
Utilities ………………………………………….. 2,100
Furnace repairs ………………………………….. 300
Colin purchased the home in 2000 for $225,000. For MACRS depreciation purposes, he allocated $185,000 to the building and $40,000 to the land.
a. If Colin’s gross business income exceeded his operating expenses by $75,000, compute his net profit for the year.
b. If Colin’s gross business income exceeded his operating expenses by $1,800, compute his net profit for the year.
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a Colins home office deduction is computed as follows Annual housing e...View the full answer
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Related Book For
Principles Of Taxation For Business And Investment Planning 2016 Edition
ISBN: 9781259549250
19th Edition
Authors: Sally Jones, Shelley Rhoades Catanach
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