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In: Accounting

blake closed his business on april 1 2018 he had no carrryovers losses and all assets...

blake closed his business on april 1 2018 he had no carrryovers losses and all assets were fully depreciated if blake elects to use the office in home simplified method what amount of his schedule c net profit or loss

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Expert Solution

From the beginning of year 2013 the option to claim the deduction for the expenses that has been incurred on the business can now be claimed.

Now IRS has allowed to use a simplified method for calculating the deduction that can be taken for the business expenses if in case a person owns a business that runs from his own home.

This is a big relief to those who mostly work from home and have business that runs from there home.

So now the effect of this simplified option for home office will be as below.

  • Deduction can be taken for the use of home area for the business, limited to maximum of 300 sq feet.
  • There has been a standard rate of deduction that can be claimed as deduction, the rate is fixed at $5 per square feet.
  • However there can be no depreciation deduction that can be claimed in this method.
  • Deduction that is claimed for the business expenses cannot be more than the gross incomes from business.

So the schedule c for the individual income will have a deduction for the business that runs from home as per the provisions of the above rules

ekkarill92 answered 1 month ago
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