Kendra is a self-employed taxpayer working exclusively from her home office. Before the home office deduction, Kendra has $6,000 of net income. Her allocable home expenses are $10,000 in total. How are the home office expenses treated on her current year tax return?
a. Only $6,000 home office expenses may be deducted, resulting in net business income of zero. The remaining $4,000 of home office expenses may be carried forward and deducted in a future year against business income.
b. All home office expenses may be deducted, resulting in a business loss of $4,000.
c, Only $6,000 of home office expenses may be deducted, resulting in a net business income of zero. None of the remaining $4,000 of home office expenses may be carried forward or deducted.
d. Only $3,000 a year of the home office expenses may be deducted.
Suppose you own a proprietorship that is in serious financial difficulty. The assets of the company are $100,000, but liabilities are $175,000. You also have, however, stock in General Motors worth $200,000. If you file bankruptcy, what amount of personal assets do you stand to lose? a. $100,000b. $75,000c. $200,000d. $275,000e. $375,000