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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 $6,060. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses $1,830 5,445 915 1,738 Real property taxes Interest on home mortgage Operating expenses of home Depreciation Also, assume that, not counting the sole proprietorship, Rita's AGI is $64,600 Assume Rita's consulting business generated $16,150 in gross income. (Leave no answer blank. Enter zero if applicable.) b. What would Rita's home office deduction be if her business generated $11,150 of gross income instead of $16,150? (Answer for both the actual expense method and the simplified method.) Answer is complete but not entirely correct. $ (7.275) $3,160 Actual expense method Simplified method
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