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