Question

Kamila is a self-employed and her primary business is writing short stories. She uses one room in her house exclusively and regularly for writing business. The office occupies 300 of the 1,200 square feet in her house. She earned $3,700 in 2019 from her writing. Her expenses for the entire house were $8,000 for rent and $2,500 for utilities. What is her home office expense deduction for 2019?

Emaar Corporation uses accrual basis of accounting for both financial accounting and ax purpose and has the information for 2019:

Beginning balance (1/1/ 2019) of allowance for bad debt expenses    $95,000

Actual write-off of Accounts receivable during the year                          53,000

Estimated uncollectible accounts for the year                                         75,000

For tax purpose, the amount of bad debt that Emaar corporation can include in 2019 tax return

Answer 1

1.)	Home office expense deduction for 2019
	Total Area	1,200	Square feet
	Total expense	10,500	(8,000 + 2,500 )
	Office occupies (%)	25%	( 300 /1,200 )
	Home office expense deduction	$ 2,625	(10,500 x 25% )
2.)	The amount of bad debt that Emaar corporation can include in 2019 tax return
	The bad debt is allowed as expense when the amount is actually written off , not when allowance is created. Hence , Emaar corporation can include Bad debt of $53,000 being actual write-off of accounts Receivable during the year in 2019 tax return.