Sarah uses one room in her home as the primary location for her business. Her home is 2,400 square feet, and the office area is 300 square feet. For the current year, she has $10,000 in mortgage interest; $2,000 in real estate taxes; and $13,000 in insurance, repairs, and maintenance related to her home. She calculates depreciation on the home office portion of her home for the current year at $4,000 (do not multiply this by the percentage). She has $25,000 in income and $18,000 in other business expenses. Which of the following statements about her home office deduction is true?

a.Depreciation is never calculated as part of a home office deduction; therefore, Sarah may not deduct it.

b.Sarah can deduct insurance, repairs, and maintenance, but not depreciation.

c.Sarah cannot deduct any of the depreciation, insurance, repairs, or maintenance.

d.Mortgage interest and real estate taxes may exceed income from the related business.