Question

Brooke owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home where she meets with clients, prepares bills, and performs other work-related tasks. The home office is 30 and the entire house is 4,500 square feet. Brooke incurred the following home-related expenses during the year. Unless indicated otherwise, assume Brooke uses the actual expense method to compute home office expenses. Real property taxes Interest on home mortgage Operating expenses of home Depreciation Repairs to home theater room $ 3,600 14,000 5,000 12,000 1,000 Problem 14-63 Parte e. Assume that Brooke uses the simplified method for computing home office expenses. If Brooke reported $2,000 of Schedule C net income before the home office expense deduction, what is the amount of her home office expense deduction and what home office expenses, if any, would she carry over to next year? (Leave no answer blank. Enter zero if applicable.) Home office expenses Home office expenses carried forward

Answer 1

Ans

Total actual home office expenses in USD	35600
Area of the house used for office	300 Sq ft
Total area of the house	4500 sq ft
Percentage of the home area used for office purpose	=>300/4500= 6.67%	6.67%
Home office expenses in usd	2373	a
Net income reported in schedule c before deduction	2000
Deduction of home office expenses	2000	b
Home office expenses carried forward   (a-b)	373