Sabin is an artist and maintains an office (his studio) in his home. His office occupies 8% (200 square feet) of the total floor space of his residence. Gross income from his business is $24,000. Expenses of the business (other than home office expenses) are $5,000. Sabin incurs the following home office expenses: Real property taxes on residence: $2,400 Interest expense on residence: $4,000 Operating expenses of residence: $2,200 Depreciation on residence (based on 8% business use): $450. Assuming Sabin uses the "simplified method" to compute the office in the home deduction, his deduction is
Sabin is an artist and maintains an office (his studio) in his home. His office occupies 8% (200 square feet) of the total floor space of his residence. Gross income from his business is $24,000. Expenses of the business (other than home office expenses) are $5,000. Sabin incurs the following home office expenses: Real property taxes on residence: $2,400 Interest expense on residence: $4,000 Operating expenses of residence: $2,200 Depreciation on residence (based on 8% business use): $450. Assuming Sabin uses the "simplified method" to compute the office in the home deduction, his deduction is
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Sabin is an artist and maintains an office (his studio) in his home. His office occupies 8% (200 square feet) of the total floor space of his residence. Gross income from his business is $24,000. Expenses of the business (other than home office expenses) are $5,000. Sabin incurs the following home office expenses:
- Real property taxes on residence: $2,400
- Interest expense on residence: $4,000
- Operating expenses of residence: $2,200
Depreciation on residence (based on 8% business use): $450.
Assuming Sabin uses the "simplified method" to compute the office in the home deduction, his deduction is
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