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: $2,400Interest expense on residence: $4,000Operating expenses of residence: $2,200Depreciation 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

$1,000. Because of the complexity involved in using the regular method and, in particular, the…

Answered: Sabin is an artist and maintains an…

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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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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