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 ( 5 0 0 square

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 $ 1,800
Interest on home mortgage 5,400
Operating expenses of home 900
Depreciation 1,720
Also, assume that, not counting the sole proprietorship, Rita\'s AGI is $64,000. 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 $16,000 in gross income.
Note: Leave no answer blank. Enter zero if applicable.
a. What is Rita\'s home office deduction for the current year?
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.)
c. Given the original facts, what is Rita\'s AGI for the year?

Step by Step Solution

3.43 Rating (153 Votes )

There are 3 Steps involved in it

Step: 1

Lets calculate each part a Ritas home office deduction for the current year using the actual expense ... 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_2

Step: 3

blur-text-image_3

Document Format ( 2 attachments)

PDF file Icon
664285a23ed20_979519.pdf

180 KBs PDF File

Word file Icon
664285a23ed20_979519.docx

120 KBs Word File

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

Taxation Of Individuals And Business Entities 2015

Authors: Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

6th Edition

978-1259206955, 1259206955, 77862368, 978-0077862367

More Books

Students also viewed these Accounting questions

Question

7. Why is using new learning in the workplace so important?

Answered: 1 week ago