Jim used the actual expense method of determining his home-office deduction last year and was required to carryover expenses of $1,500. How much of that carried over expense can he deduct this year when he uses the simplified method, assuming he uses 10% of his home for business purposes?
Jim used the actual expense method of determining his home-office deduction last year and was required to carryover expenses of $1,500. How much of that carried over expense can he deduct this year when he uses the simplified method, assuming he uses 10% of his home for business purposes?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Jim used the actual expense method of determining his home-office deduction last year and was required to carryover expenses of $1,500. How much of that carried over expense can he deduct this year when he uses the simplified method, assuming he uses 10% of his home for business purposes?
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Expert Solution
Step 1: Introduction to home-office deduction
Home-office deduction:-
- A person shall be eligible for a home office deduction if he is using a property for both residence and business.
- An amount of $5 per square foot limited to $1,500 is eligible for a home office deduction.
- Home office deductions will reduce the tax burden and in order to claim this deduction one must fulfill the IRS requirements.
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