[The following information applies to the questions displayed below.]Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses,other than home office expenses, total $5,600. The following home-related expenses have been allocated to her homeoffice under the actual expense method for calculating home office expenses.Real property taxesInterest on home mortgageOperating expenses of homeDepreciation$ 1,6005,1008001,600Also, assume that, not counting the sole proprietorship, Rita's AGI is $60,000. Rita itemizes deductions, and her itemizeddeduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to businessuse of the home.Assume Rita's consulting business generated $13,000 in gross income for the current year. Further, assume Rita uses theactual expense method for computing her home office expense deduction.c. What types and amounts of expenses will she carry over to next year?Note: Leave no answer blank. Enter zero if applicable.Tier 1 expenses carried over to next yearTier 2 expenses carried over to next yearTier 3 expenses carried over to next yearAmount

Deductions are tools used by people or businesses to identify and record the many acceptable costs…

Answered: Rita owns a sole propri

Business

Accounting

Rita owns a sole propri

Income Tax Fundamentals 2020

38th Edition

ISBN:9780357391129

Author:WHITTENBURG

Publisher:WHITTENBURG

Chapter3: Business Income And Expenses

Section: Chapter Questions

Problem 21MCQ

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Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home (500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,600. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Real property taxes $ 1,600 Interest on home mortgage 5,100 Operating expenses of home 800 Depreciation 1,600 Also, assume that, not counting the sole proprietorship, Rita's AGI is $60,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home.Assume Rita’s consulting business generated $15,000 in gross income. (Leave no answer blank. Enter zero if applicable.) a. What is Rita’s home office deduction for the current…
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