TABLE 7.3 MACRS for Residential Real Property (27.5-year property) Year 1 2 3 4 Month Placed in Service 5 6 7 Depreciation Rate 8 9 10 11 12 1 2-27 28 29 3.485% 3.636 1.970 0.000 3.182% 3.636 2.273 0.000 2.879% 3.636 2.576 0.000 2.576% 3.636 2.879 0.000 2.273% 3.636 3.182 0.000 1.970% 3.636 3.458 0.000 1.667% 3.636 3.636 0.152 1.364% 3.636 3.636 0.455 1.061% 3.636 3.636 0.758 0.758% 3.636 3.636 1.061 0.455% 3.636 .636 1.364 0.152% 3.636 3.636 1.667 3 TABLE 7.4 MACRS for Nonresidential Real Property (39-year property) Year 1 2 3 8 9 10 11 12 Month Placed in Service 4 5 6 7 Depreciation Rate 1.819% 1.605% 1.391% 1.177% 2.564 2.564 2.564 2.564 0.7490.963 11771.391 2-39 40 2.461% 2.564 0.107 2.247% 2.564 0.321 2.033% 2564 0.535 0.963% 2.564 1.605 0.749% 2.564 1.819 0.535% 2.564 2.033 0.321% 2.564 2.247 0.107% 2.564 2.461 Colin, a self-employed consultant, uses a room of his home as a business office. This room represents 10 percent of the home's square footage. This year, Colin incurred the following expenses in connection with his home. Use Table 7-3 and Table 7-4. Home mortgage interest Property tax on residence Homeowner's insurance Utilities Furnace repairs $12,980 2,200 1,475 2,100 300 Colin purchased the home in 2000 for $225,000. For MACRS depreciation purposes, he allocated $185,000 to the building and $40,000 to the land. a. If Colin's gross business income exceeded his operating expenses by $75,000, compute his net profit for the year. b. If Colin's gross business income exceeded his operating expenses by $1,800, compute his net profit for the year. Complete this question by entering your answers in the tabs below. Required A Required B If Colin's gross business income exceeded his operating expenses by $75,000, compute his net profit for the year. (Round your intermediate computations to the nearest whole dollar value.) Net profit Required A Required B