Question

Melanie is employed full-time as an accountant for a national hardware chain. She also has recently started a private consulting practice, which provides tax advice and financial planning to the general public. For this purpose, she maintains an office in her home. Expenses relating to her home for 2017 are as follows: Real property taxes $6,000 Interest on home mortgage 7,200 Operating expenses of home 1,500 Melanie's residence cost $364,000 (excluding land) and has living space of 2,000 square feet, of which 20% (400 square feet) is devoted to business. The office was placed in service in February 2016, and under the Regular Method, Melanie had an unused office in the home deduction of $1,200 for 2016. Assume there is sufficient net income from her consulting practice. Click here to access the depreciation table to use for this problem. a.

What is Melanie's office in the home deduction under the Regular Method. Round your final answer to nearest dollar. $-----------------

Answer 1

Particulars	Amount
Real Property Tax(6000*20%)	$                               1,200.00
Add: interest on home mortgage (7200*20%)	$                               1,440.00
Operating expenses (1500*20%)	$                                   300.00
Allocated depreciation( 364000*20%*.02564)	$                                     1,867
Home deduction under regular method	$                                     4,807
In addition to the $ 4807 melaine can claim the $1200 deduction from prior
period
melaine can claim an office in the home expenses (4807+1200) = 6007
Because melaine is self employed as to her consulting activity the exp are
Deductions for AGI
the real property taxes and interest not claimed (6000-1200)= 4800
and (7200-1440) = $5760 , qualify as itemized deductions from AGI