Brooke owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home where she meets with clients, prepares bills, and performs other work-related tasks. The home office is 300 square feet and the entire house is 4,500 square feet. Brooke incurred the following home-related expenses during the year. Unless indicated otherwise, assume Brooke uses the actual expense method to compute home office expenses.

Real property taxes ............................$ 3,600

Interest on home mortgage ................... 14,000

Operating expenses of home ................. 5,000

Depreciation .................................... 12,000

Repairs to home theater room................ 1,000

a. What amount of each of these expenses is allocated to the home office?

b. What are the total amounts of tier 1, tier 2, and tier 3 expenses allocated to the home office?

c. If Brooke reported $2,000 of Schedule C income before the home office expense deduction, what is the amount of her home office expense deduction and what home office expenses, if any, would she carry over to next year?

d. Assuming Brooke reported $2,000 of Schedule C income before the home office expense deduction, complete Form 8829 for Brooks home office expense deduction. Also assume the value of the home is $500,000 and the adjusted basis of the home (exclusive of land) is $468,019.

e. Assume that Brooke uses the simplified method for computing home office expenses. If Brooke reported $2,000 of Schedule C net income before the home office expense deduction, what is the amount of her home office expense deduction and what home office expenses, if any, would she carry over to next year?