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Sally has a full-time job as an accountant with a large corporation. In her spare time, she prepares tax returns in a spare room of her home. Most of her business comes from friends and referrals from former clients. Typically, clients drop of their materials at Sally's house and return sometime later to review and sign the returns. The floor space of Sally's residence is 2,000 square feet and her dedicated work space is 300 square feet. Gross income from the business is $23,000; direct expenses (other than home office) are $6,000. Expenses relating to the residence are as follows: Real property taxes Interest on home mortgage Operating expenses of residence Depreciation (before applying business use percentage) $5,500 9,500 3,000 5,000 a. If Sally uses the regular (actual expense) method of computing the deduction for office in the home, what is the net income from the tax return preparation business? b. What is the net income from the business if she uses the simplified method? c. What is the impact on her itemized deduction under both methods