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8 November, 05:59

Cindy, who is self-employed, maintains an office in her home that comprises 8% (200 square feet) of total floor space. Gross income for her business is $42,000, and her residence expenses are as follows: Real property taxes $2,400 Interest on mortgage 4,000 Operating expenses 2,200 Depreciation (based on 8% business use) 450. What is Cindy's office in the home deduction based on the

a. Regular Method

b. The simplified method

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  1. 8 November, 06:25
    0
    total home deduction is = $1138

    home deduction is $1000

    Explanation:

    given data

    Real property taxes = $2,400

    Interest on mortgage = 4,000

    Operating expenses = 2,200

    Depreciation = 450

    solution

    a. Regular Method

    first we find deduction that is

    real property deduction = 2400 * 8% = 192

    interest mortgage = 4000 * 8% = 320

    operating expenses = 2200 * 8% = 176

    and deduction is = 450

    so total home deduction is = 192 + 320+176+450

    total home deduction is = $1138

    and

    b. The simplified method

    home deduction are = 5 deductible * 200 sq ft

    home deduction are $1000
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