Alex Is a Self-Employed Dentist Who Operates a Qualifying Office

question 32

Multiple Choice

Alex is a self-employed dentist who operates a qualifying office in his home.Alex has $180,000 gross income from his practice and $160,000 of expenses directly related to the business,i.e.,non-home office expenses.Alex's allocable home office expenses for mortgage interest expenses and property taxes are $14,000 and other home office expenses are $9,000.What is Alex's total allowable home office deduction?

• A)$9,000
• B)$14,000
• C)$20,000
• D)$23,000

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Definitions:

Net Operating Income

A company's income after all operating expenses are deducted but before interest and taxes are accounted for.

Break-Even

The juncture where overall expenses match the total income, leading to neither a profit nor a loss.

Sales Dollars

The total revenue generated from the sale of goods or services, expressed in monetary value.

Net Operating Income

The profit generated from a company's operational activities, calculated as revenues minus the cost of goods sold and all operational expenses, excluding interest and taxes.