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 d 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. Required: a. What is Rita's home office deduction for the current year? 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.) c. Given the original facts, what is Rita's AGI for the year? d. Given the original facts, what types and amounts of expenses will she carry over to next year? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is Rita's home office deduction for the current year? Home office deduction 2,300 $ tion for

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Question

Subject : Accounting

 

 

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
Also, assume that, not counting the sole proprietorship, Rita's AGI is $63,200. Rita itemizes deductions, and her itemized d
non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home.
$ 1,760
5,340
880
1,696
Assume Rita's consulting business generated $15,800 in gross income.
Note: Leave no answer blank. Enter zero if applicable.
Required:
a. What is Rita's home office deduction for the current year?
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.)
c. Given the original facts, what is Rita's AGI for the year?
d. Given the original facts, what types and amounts of expenses will she carry over to next year?
Complete this question by entering your answers in the tabs below.
Required A
Required B Required C Required D
What is Rita's home office deduction for the current year?
Home office deduction
2,300
tion for
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 Also, assume that, not counting the sole proprietorship, Rita's AGI is $63,200. Rita itemizes deductions, and her itemized d non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. $ 1,760 5,340 880 1,696 Assume Rita's consulting business generated $15,800 in gross income. Note: Leave no answer blank. Enter zero if applicable. Required: a. What is Rita's home office deduction for the current year? 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.) c. Given the original facts, what is Rita's AGI for the year? d. Given the original facts, what types and amounts of expenses will she carry over to next year? Complete this question by entering your answers in the tabs below. Required A Required B Required C Required D What is Rita's home office deduction for the current year? Home office deduction 2,300 tion for
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