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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 $6,125. 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 $ 1,705 5,275 625 1,740 Also, assume that not counting the sole proprietorship, Rita's AGI is $61,750. Assume Rita's consulting business generated $13,595 in gross income for the current year. Further, assume Rita uses the actual expense method for computing her home office expense deduction. Problem 6-45 Part a a. What is Rita's home office deduction for the current year? Home office deduction b. What is Rita's AGI for the year? AGIL
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