1. Lyndsay is a ballet teacher and she gives ballet lessons in her home. She uses the basement in her home exclusively for her ballet business. The basement is 300 sq. feet and her entire home is 1,500 sq. feet. Lyndsay has the following items of income and expense from her business: Lyndsay incurs no other state and local income taxes and she itemizes her deductions. Income - $75,000 Real Property taxes $10,000 Mortgage interest $ 35,000 Depreciation on house $8,000 Business Expenses directly attributable to business $60,000 Operating expenses of house $6,000 How much income or loss will Lyndsay recognize for tax purposes? Will any amount be carried over to future years? Should Lyndsay use the simplified method for computing the income for her business? If so, why? If not, why not? 1. Lyndsay is a ballet teacher and she gives ballet lessons in her home. She uses the basement in her home exclusively for her ballet business. The basement is 300 sq. feet and her entire home is 1,500 sq. feet. Lyndsay has the following items of income and expense from her business: Lyndsay incurs no other state and local income taxes and she itemizes her deductions. Income - $75,000 Real Property taxes $10,000 Mortgage interest $ 35,000 Depreciation on house $8,000 Business Expenses directly attributable to business $60,000 Operating expenses of house $6,000 How much income or loss will Lyndsay recognize for tax purposes? Will any amount be carried over to future years? Should Lyndsay use the simplified method for computing the income for her business? If so, why? If not, why not