Question

Which of the following expenses are deductible under the home-office deduction only in an amount equal to the total of such expenses multiplied by the percentage of the home used for business?

a. indirect expenses
b. direct expenses
c. unrelated expenses
d. qualified expenses

Answer 1

Indirect expenses are the correct answer and are deductible in proportion to the home used for business purposes. The correct answer to the question is a. indirect expenses.

Step-by-step explanation:

Indirect expenses are costs that benefit both the business and personal use of the home, such as insurance, utilities, and general repairs. These are deductible under the home-office deduction in an amount equal to the total expenses multiplied by the percentage of the home used for business purposes. Direct expenses, which apply only to the area of the home used for business, are fully deductible.

Unrelated expenses, associated with parts of the home not used for business, are not deductible. Qualified expenses can include both direct and indirect expenses; however, the term "qualified expenses" is more general and not specific to the question.