Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,920. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes Interest on home mortgage Operating expenses of home Depreciation $ 1,760 5,340 880 1,696 Also, assume that, not counting the sole proprietorship, Rita's AGI IS $63,200. Rita Itemizes deductions, and her Itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita's consulting business generated $15,800 In gross income. Note: Leave no answer blank. Enter zero If applicable. Problem 14-64 Part b (Algo) b. What would Rita's home office deduction be if her business generated $10,800 of gross Income Instead of $15,800? (Answer for both the actual expense method and the simplified method.) Actual expense method Simplified method
Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,920. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes Interest on home mortgage Operating expenses of home Depreciation $ 1,760 5,340 880 1,696 Also, assume that, not counting the sole proprietorship, Rita's AGI IS $63,200. Rita Itemizes deductions, and her Itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. Assume Rita's consulting business generated $15,800 In gross income. Note: Leave no answer blank. Enter zero If applicable. Problem 14-64 Part b (Algo) b. What would Rita's home office deduction be if her business generated $10,800 of gross Income Instead of $15,800? (Answer for both the actual expense method and the simplified method.) Actual expense method Simplified method
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500
square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses,
other than home office expenses, total $5,920. The following home-related expenses have been allocated to her home
office under the actual expense method for calculating home office expenses.
Real property taxes
Interest on home mortgage
Operating expenses of home
Depreciation
$ 1,760
5,340
880
1,696
Also, assume that, not counting the sole proprietorship, Rita's AGI IS $63,200. Rita Itemizes deductions, and her Itemized
deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business
use of the home.
Assume Rita's consulting business generated $15,800 In gross income.
Note: Leave no answer blank. Enter zero If applicable.
Problem 14-64 Part b (Algo)
b. What would Rita's home office deduction be if her business generated $10,800 of gross Income Instead of $15,800? (Answer for
both the actual expense method and the simplified method.)
Actual expense method
Simplified method
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