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 $5,840. 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 $ 1,720 Interest on home mortgage 5,280 Operating expenses of home 860 Depreciation 1,672 Also, assume that, not counting the sole proprietorship, Ritas AGI is $62,400. 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 Ritas consulting business generated $15,600 in gross income. (Leave no answer blank. Enter zero if applicable.) Problem 14-64 Part a (Algo) a. What is Ritas home office deduction for the current year?
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