Chapter 3, Problem 21P

Cindy operates a computerized engineering drawing business from her home. Cindy maintains a home office and properly allocates the following expenses to her office:

Depreciation      $1,500

Utilities      500

Real estate taxes      325

Mortgage interest (100 percent deductible) 500

1. Assume that Cindy earns income of $4,400 from her business for the year before deducting home office expenses. She has no other expenses associated with the business. Calculate Cindy's deduction for home office expenses.

$__________

2. Assume that Cindy earns income of $2,600 from her business during the year before deducting home office expenses. Calculate Cindy's deduction for home office expenses.

$__________