Rocky repairs TV sets in the basement of his personal residence. Rocky uses 450 square feet (20%) of his residence exclusively for the repair business. Business profit is $4,000 before any office-in-home expenses are deducted. Expenses relating to the residence are as follows: Real property taxes $5,500 Interest on home mortgage 7,000 Operating expenses of residence 3,000 Depreciation (100% amount) 5,000 The maximum home office expense deduction he can take in 2020 using the regular (actual expense) method is _____. The amount of expenses Rocky would carryover to 2021 if he uses the regular method is _____. The amount of home office expense deduction he can take in 2021 using the simplified method is _____. The amount of expenses Rocky would carryover to 2021 if he uses the simplified method is ____. Rocky should use the regular method or the simplified method? _____
Rocky repairs TV sets in the basement of his personal residence. Rocky uses 450 square feet (20%) of his residence exclusively for the repair business. Business profit is $4,000 before any office-in-home expenses are deducted. Expenses relating to the residence are as follows: Real property taxes $5,500 Interest on home mortgage 7,000 Operating expenses of residence 3,000 Depreciation (100% amount) 5,000 The maximum home office expense deduction he can take in 2020 using the regular (actual expense) method is _____. The amount of expenses Rocky would carryover to 2021 if he uses the regular method is _____. The amount of home office expense deduction he can take in 2021 using the simplified method is _____. The amount of expenses Rocky would carryover to 2021 if he uses the simplified method is ____. Rocky should use the regular method or the simplified method? _____
Chapter9: Deduct Ions: Employee And Self-employed - Related Expenses
Section: Chapter Questions
Problem 21CE
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Question
Rocky repairs TV sets in the basement of his personal residence. Rocky uses 450 square feet (20%) of his residence exclusively for the repair business. Business profit is $4,000 before any office-in-home expenses are deducted. Expenses relating to the residence are as follows:
|
Real property taxes |
$5,500 |
|
Interest on home mortgage |
7,000 |
|
Operating expenses of residence |
3,000 |
|
|
5,000 |
- The maximum home office expense deduction he can take in 2020 using the regular (actual expense) method is _____.
- The amount of expenses Rocky would carryover to 2021 if he uses the regular method is _____.
- The amount of home office expense deduction he can take in 2021 using the simplified method is _____.
- The amount of expenses Rocky would carryover to 2021 if he uses the simplified method is ____.
- Rocky should use the regular method or the simplified method? _____
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VIEWStep 2 1) Computation of Maximum deduction of home office expenses
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VIEWStep 4 2. Computation of amount of deductions carryover in 2021
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VIEWStep 6 3. Computation of office expenses deduction by simplified method
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VIEWStep 8 4. Computation of amount of expenses carried over by simplified method
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ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT