Final answer:
Arlene can deduct approximately 43% of her rent as a business-use-of-home expense, which is closest to 40% (option B).
Step-by-step explanation:
The percentage of Arlene's rent that may be deducted as a business-use-of-home expense is determined by calculating the portion of her apartment that is used for her catering business.
Since Arlene's kitchen is 300 square feet and her total apartment is 700 square feet, the calculation for her business use space is as follows:
Business space / Total space = 300 sq. ft. / 700 sq. ft.
= 0.4286, or 42.86%.
Rounding this percentage to the nearest whole number gives us 43%, which is closest to option B) 40%.