Homework - Assignment for Week 7 - ACC 307 Federal Income...

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Assignment for Week 7 --- ACC 307 Federal Income Taxes Activity Details Perform the following tasks: Step 1: Answer the following problems from chapters 9 and 10 of the Taxes textbook: Chapter 9 Page 9-47: Problem 46 Page 9-48: Problem 51 Chapter 10 Page 10-38: Problem 26 Page 10-40: Problem 36 Page 10-42: Problem 43 (Hint: Look on page 10-28 for limitations to itemized deductions) Use MS Word or MS Excel to write the answers to the questions. Step 2: Save and submit your assignment. Once you have completed the assignment, save a copy for yourself in an easily accessible place, and submit a copy to your instructor using the dropbox. 46. a. The office in the home expense of $3,400 is determined below: Real property taxes (20% × $3,900) $ 780 Interest on home mortgage (20% × $4,000) 800 Operating expenses on home (20% × $1,100) 220 Allocated depreciation on home 1,600 Total $3,400 Since Christine’s consulting business yields a profit of $7,600 [$16,000 (income) – $3,400 (office in the home) – $5,000 (related expenses)], all office in the home expenses are allowed. Because Christine is self-employed as to her consulting activity, the expenses are deductions for AGI, reported on Schedule C. The real property taxes and interest not claimed, $3,120 ($3,900 – $780) and $3,200 ($4,000 – $800), qualify as itemized deductions from AGI. b. Because they relate only to the office, such expenses are treated as direct expenses. Consequently, they are deductible in full and need not be apportioned between the business and personal use of the residence. The office in the home expense now becomes $6,400 ($3,400 + $3,000). c. Since the deduction for the current year cannot exceed the income from the business, any excess is carried over to future years. The excess to be carried over is $400 [$8,000 (income) – $3,400 (office in the home) – $5,000 (related expenses)]. Example 41
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51. All would be tax free assuming the taxpayer meets the conditions listed on page 9-28. Individual Volume – Chapter 9-48 (cont’d) These items are reported on Schedule A and are reduced by 2% of AGI as follows: Total unreimbursed employee expenses ($7,000 + $1,750) $8,750 Less: 2% of $58,600 (AGI) (1,172) Total employee deductions from AGI allowed $7,578 Chapter 10 Solutions: 26. Only $6,300 of the cost of the system qualifies since $2,500 of
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Homework - Assignment for Week 7 - ACC 307 Federal Income...

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