Assignment for Week 7 --- ACC 307 Federal Income Taxes
Perform the following tasks:
Step 1: Answer the following problems from chapters 9 and 10 of the Taxes textbook:
Page 9-47: Problem 46
Page 9-48: Problem 51
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
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.
a. The office in the home expense of $3,400 is determined below:
Real property taxes (20% × $3,900)
Interest on home mortgage (20% × $4,000)
Operating expenses on home (20% × $1,100)
Allocated depreciation on home
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
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
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)].