Answer:
$11,100.28
$1300
Explanation:
Given that:
Cindy, who is self-employed, maintains an office in her home that comprises 16% (260 square feet) of total floor space. Gross income for her business is $44,150, and her residence expenses are as follows: Real property taxes $4,188 Interest on mortgage 6,980 Operating expenses 3,490 Depreciation (based on 16% business use) 3,755 If required, round your final answer to the nearest dollar. a. What is Cindy's office in the home deduction based on the regular method? $ b. What is Cindy's office in the home deduction based on the simplified method? $
Deduction :
Real property taxes = 16% * $4,188 = $670.08
Interest on mortgage = 16% * 6,980 = $1116.80
Operating expenses = 16% * 3,490 = $558.40
Depreciation (based on 16% business use) = 3,755
Total deduction:
$(670. 08 + 1116.80 + 5558.40 + 3755) = $11,100.28
Simplified deduction :
$5 per square foot of home used for business
Number of square feet = 260
$5 * 260 = $1300