Rhea is a self-employed professional singer. She resides in a rented apartment and uses one room exclusively as a business office. This room includes 440 of the 2,200 square feet of living space in the apartment. Rhea performs in recording studios and concert halls, but she conducts all of the administrative duties with respect to the business in her home office. This year, Rhea’s apartment rent was $55,000. She paid $5,900 to a housekeeping service that cleaned the entire apartment once a week and $2,700 for renter’s insurance on the apartment furnishings. Compute Rhea’s home office deduction assuming that her net profit before the deduction was $370,000. Compute Rhea’s home office deduction assuming that her net profit before the deduction was $4,700.

Respuesta :

Answer: A - Net Profit $357,280

               B - Net Loss = $(8020)

Explanation: Rhea uses a 440 of 2200 square feet living space for her business office.

440/2200*55000 (rent) = $11,000

440/2200*5900 (house keeping =$1,180

440/2200 * 2700(insurance) =$540

Net Profit before deduction $370,000

Net profit after deduction = $370,000-$11,000-$1,180-$540 = $357,280

Net Profit before deduction $4,700

Net loss after deduction = $4,700-$11,000-$1,180-$540=$(8020)