AC553_W3_Solution7_51 - taxpayers (real estate taxes and...

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1 Problem 7-51 Solution Home Office Expenses: Computation a. Jane Mason’s home office deduction for 2011 is $1,360, computed as follows: Home expenses $17,000 Portion of home used for home office × 8 % Home office deduction $1,360 b. Jane’s home office deduction is limited to $1,000, the income derived from the business activities carried on at home reduced by all related tax deductions other than the business use of home deduction. Expenses normally allowable as deductions to all
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Unformatted text preview: taxpayers (real estate taxes and interest on home mortgage) are deducted first. Other expenses are deductible to the extent of the remaining balance of income. Any excess expenses are not deductible but could be carried forward. ($1,000 gross income less $880 interest and taxes allocation less $120 limited allocation of other home office expenses equals $1,000 home office deduction.)...
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This note was uploaded on 02/21/2012 for the course ACCOUNTING 553 taught by Professor James during the Spring '12 term at DeVry Phoenix.

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