Question
Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she
Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,820. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses.
Real property taxes | $ 1,710 |
---|---|
Interest on home mortgage | 5,265 |
Operating expenses of home | 855 |
Depreciation | 1,666 |
Also, assume that, not counting the sole proprietorship, Rita's AGI is $62,200. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home.
Assume Rita's consulting business generated $15,550 in gross income.
Note: Leave no answer blank. Enter zero if applicable.
Required:
- What is Rita's home office deduction for the current year?
- What would Rita's home office deduction be if her business generated $10,550 of gross income instead of $15,550? (Answer for both the actual expense method and the simplified method.)
- Given the original facts, what is Rita's AGI for the year?
- Given the original facts, what types and amounts of expenses will she carry over to next year?
Note: The subject is Federal income taxes 1. Please I need the correct answers.
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