Question

Under the regular (actual expense) method, the portion of the office in the home deduction that exceeds the income from the business can be carried over to future years.

A) True
B) False

Answer 1

The portion of the office in the home deduction that exceeds the income from the business cannot be carried over to future years.

Step-by-step explanation:

The statement is False. Under the regular (actual expense) method, the portion of the office-in-home deduction that exceeds the income from the business cannot be carried over to future years. In this method, the deduction for business use of the home is limited to the gross income derived from the qualified business use of the home minus business expenses unrelated to the use of the home.

For example, if the income from a business that operates out of a home is $10,000, and the total expenses that are directly related to the business are $7,000, the maximum deduction for business use of the home would be $3,000 (the income minus unrelated expenses). Any excess deduction cannot be carried over to future years under the regular method.