Question

Question 74 of 75 Blake operated as a sole proprietor, reported on Schedule C (Form 1040). He used 350 square feet of his 2.100-square toot rented loft exclusively and regularly for business. Blake used the cash accounting method and had tihe following income and e for his financial planning business Gross receipts: $36,960 Expenses: e Advertising: $80 e Business insurance: $685 e Business license: $100 Comprehensive health insurance (entire year): $7,788 e Office supplies: $76 o Postage: $38 o Rent (entire year): $14,400 o Renter's insurance (entire year): $1,055 o Second phone line, exclusively for business: $103 o Tax preparation (allocated to business): $350 Utilities (entire year): $2,281. Blake closed his business on April 1, 2018. He had no carryover losses and all assets were fully depreciated. If E to use actual office-in-home (OIH) expenses, what is the amount of his deduction'? O $648 O $739 O $2,576 O $2,957 Mark for follow up

Answer 1

Answer:

Correct answer is:

$2,957

Explanation:

Home office percentage = 350 / 2100 = 16.67%

Deduction = (Rent + Insurance + Utilities) * 16.67%

= (14400 + 1055 + 2281) * 16.67%

=$2,957

As such option D is correct and other options A,B and Care incorrect.