Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

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

image text in transcribedimage text in transcribedimage text in transcribedimage text in transcribed

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 $6,000. 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 Interest on home mortgage Operating expenses of home Depreciation $1,800 5,400 900 1,720 Also, assume that, not counting the sole proprietorship, Rita's AGI is $64,000. Assume Rita's consulting business generated $16,000 in gross income. (Leave no answer blank. Enter zero if applicable.) a. What is Rita's home office deduction for the current year? Home office deduction b. What would Rita's home office deduction be if her business generated $11,000 of gross income instead of $16,000? (Answer for both the actual expense method and the simplified method.) Actual expense method Simplified method C. Given the original facts, what is Rita's AGI for the year? AGI d. Given the original facts, what types and amounts of expenses will she carry over to next year? Tier 1 expenses carried over to next year Tier 2 expenses carried over to next year Tier 3 expenses carried over to next year

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Discovering Advanced Algebra An Investigative Approach

Authors: Jerald Murdock, Ellen Kamischke, Eric Kamischke

1st edition

1559539844, 978-1604400069, 1604400064, 978-1559539845

Students also viewed these Accounting questions