Colin, a self-employed consultant, uses a room of his home as a business office. This room represents 10 percent of the homes square footage. This year, Colin incurred the following expenses in connection with his home:

Home mortgage interest	$	12,980
Property tax on residence		2,200
Homeowners 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. Use Table 7.4.

1. If Colins gross business income exceeded his operating expenses by $75,000, compute his net profit for the year.
2. If Colins gross business income exceeded his operating expenses by $1,800, compute his net profit for the year.