Pete qualifies for a home office deduction. The amount of space devoted to business use is 300 square feet of the total 1,200 square feet in hisapartment. Pete's total rent for the year is $9,600, and he pays utilities (other than telephone) of $2,500 for the year.Calculate Pete's deduction for home office expenses before the gross income limitation.RentUtilitiesTotal home office expenses

Answered: Calculate Pete's deduction for home…

Calculate Pete's deduction for home office expenses before the gross income limitation. Rent Utilities Total home office expenses

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Pete qualifies for a home office deduction. The amount of space devoted to business use is 300 square feet of the total 1,200 square feet in his
apartment. Pete's total rent for the year is $9,600, and he pays utilities (other than telephone) of $2,500 for the year.
Calculate Pete's deduction for home office expenses before the gross income limitation.
Rent
Utilities
Total home office expenses

Expert Solution

Solution:-

Total amount of space of his apartment = 1,200 square feet

space devoted to business use is = 300 square feet

percentage of space = 300*100/1200 = 25%

Rent amount allocated to Home business = $9,600*25%

= $ 2,400

Utilities other than telephone = $ 2,500*25%

=$ 625

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