Blake operated as a sole proprietor reported on schedule he used 350 square feet of his...

Blake operated as a sole proprietor reported on schedule he used 350 square feet of his 2100 square feet rented loft exclusively and regularly for business. Blake used the cash accounting method and had the following income and expenses for his financial planning business:

gross receipts$3695
advertising$80
business Insurance$685
business license $100
comprehensive health insurance entire year$7788
office supplies$76
postage$38
rent entire year $14400
renters insurance$1055
second phone line exclusively for business$103
tax prep business$350
utilities entire year$2282.

Blake closed his business April 1 2018. he had no carryover losses and all assets were fully deprecated. if Blake elects to use actual oih expenses what is the amount of his deduction

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Expert Solution

Calculation of amount of deduction if Blake elects to use actual office-in-home(OIH) expenses:

Total space = 2,100 square feet space used for business = 350 square feet.

Rent (Entire year) = 14,400

Renters insurance (Entire year) = 1,055

Utilities (Entire year) 2,282

Total = 17,737

Expenses allowed for office portions = 17,737 *350/2,100*3/12

= 737

Therefore, Amount of deduction = 739

ekkarill92 answered 1 year ago

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