Question

Melanie is employed full-time as an accountant for a national hardware chain. She also has recently started a private consulting practice, which provides tax advice and financial planning to the general public. For this purpose, she maintains an office in her home. Expenses relating to her home for 2019 are as follows:

Real property taxes	$5,000
Interest on home mortgage	6,000
Operating expenses of home	1,250

Melanie's residence cost $376,000 (excluding land) and has living space of 2,000 square feet, of which 29% (580 square feet) is devoted to business. The office was placed in service in February 2018, and under the Regular Method, Melanie had an unused office in the home deduction of $675 for 2018. Assume there is sufficient net income from her consulting practice.

a. What amount can Melanie claim this year for her office in the home deduction under the Regular Method?
$

b. What is Melanie's office in the home deduction under the Simplified Method?
$

Answer 1

Regular Method Deduction
Particular	Amount	Working
Real propert Tax	$1,450.00	($5000*29%)
Interest on Home Mortgage	$1,740.00	($6000*29%)
Operating expense	$362.50	($1250*29%)
Depreciation	$2,795.8.00	($376,000*2.564%*29%)
home deduction	$675
Home deduction Under Deductible Methos	$7,023.30
Note: 29% are used for Business
Simplified Method od Deduction
Under Simplified Method ome deduction should be $5 Per Square feet used for business purpose Subject to a maximum 300 Square feet
Melanie is using 580 Square feet for business purpos, Hence the maximum deduction for office in home would be $1500( 300 Square Feet *$5)