Cindy, who is self-employed, maintains an office in her home that comprises 8% (200 square feet) of total floor space. Gross income for her business is $42,000, and her residence expenses are as follows: Real property taxes $2,400 Interest on mortgage 4,000 Operating expenses 2,200 Depreciation (based on 8% business use) 450. What is Cindy's office in the home deduction based on the

a. Regular Method

b. The simplified method

total home deduction is = $1138

home deduction is $1000

Explanation:

given data

Real property taxes = $2,400

Interest on mortgage = 4,000

Operating expenses = 2,200

Depreciation = 450

solution

a. Regular Method

first we find deduction that is

real property deduction = 2400 * 8% = 192

interest mortgage = 4000 * 8% = 320

operating expenses = 2200 * 8% = 176

and deduction is = 450

so total home deduction is = 192 + 320+176+450

total home deduction is = $1138

and

b. The simplified method

home deduction are = 5 deductible * 200 sq ft

home deduction are $1000