McGraw-Hill's Taxation of Individuals and Business Entities 3rd Edition by Brian Spilker, Benjamin Ayers, John Robinson, Edmund Outslay, Ronald Worsham, John Barrick, Connie Weaver

Exercise 19

Brooke owns a sole proprietorship in which she works as a management consultant.She maintains an office in her home where she meets with clients, prepares bills, and performs other work-related tasks.The home office is 300 square feet and the entire house is 4,500 square feet.Brooke incurred the following home-related expenses during the year. a.What amount of each of these expenses is allocated to the home office?
b.What are the total amounts of tier 1, tier 2, and tier 3 expenses allocated to the home office?
c.If Brooke reported $2,000 of Schedule C income before the home office expense deduction, what is the amount of her home office expense deduction and what home office expenses, if any, would she carry over to next year?