Respuesta :
Answer:
Explanation:
a. Computation of Rita’s home office deduction for the current year:
Actual expenses method, Rita is allowed to deduct all the expenses and the total deductions are =6,700+800+1,600 = $9,100.
Simplified method:
Rita’s home office deduction will be limited to =300square feet × $5 application rate= $1,500.
However, she can deduct expenses relating to interest and taxes = $6,700 as itemized deductions.
Thus, the total deductions = $1,500+ $6,700 = $8,200.
Take a look to the document attached.
b. Computation of Rita’s home office deduction for the current year if Gross income is $10,000:
Actual expenses method, Rita is allowed only mortgage interest and taxes and all other expenses relating to tire 2 and 3 are carried forward to next year.
Take a look to the document attached.
Simplified method:
Rita’s home office deduction will be limited to =300square feet × $5 application rate= $1,500.
However, she can deduct expenses relating to interest and taxes = $6,700 as itemized deductions.
Thus, the total deductions = $1,500+ $6,700 = $8,200.
c. Rita's AGI = Sole proprietorship income + income from business
= $60,000 + 300 = $60,300
d. Based on the above calculations Rita can deduct all the expenses in this year itself, thus she does not carry any expenses to next year.