Question

Which of the following would be considered a direct expense when using the actual expense method of figuring the deduction for a taxpayer's business use of part of his or her home?

A. A deduction may be allowed if the portion of the home is used exclusively and on a regular basis as the principal place of business of the taxpayer's trade or business.
B. The deduction is generally limited to gross income derived from the business.
C. The IRS permits taxpayers to deduct an amount based on square footage used at a specific dollar rate per square foot in lieu of actual expenses, but the other requirements to take the deduction still apply.
D. All of the above are true.

Answer 1

Option A is the correct direct expense when using the actual expense method of home business deductions; it refers to the exclusive and regular use of part of the home as the principal business place, which can incur direct costs like a business phone line.

Step-by-step explanation:

Among the options listed, a direct expense when using the actual expense method of figuring the deduction for a taxpayer's business use of part of his or her home would be A. This option refers to a specific condition where the taxpayer is utilizing part of their home exclusively and on a regular basis as the principal place of business in their trade or business. Direct expenses in this context are costs that are directly attributable to the business use of the home, such as a dedicated business phone line or office supplies for that particular area of the home.

Options B and C relate to other aspects of home business deductions. B indicates limitations on the deduction amount, while C describes the simplified method, which uses a standard rate per square foot for the deduction instead of actual expenses. Though both options are true statements regarding the home office deduction, they do not directly pertain to direct expenses involved in the actual expense method.