Dighi, an Artist, Uses a Room in His Home (250

question 1937

Essay

Dighi, an artist, uses a room in his home (250 square feet) as a studio exclusively to paint. The studio meets the requirements for a home office deduction. (Painting is considered his trade or business.) The following informati appears in Dighi's records: a. What is the amount of Dighi's home office deduction if he is self- employed?
b. If some amount is not allowed under the tax law, how is the disallowed amount treated?
c. Assume all of Dighi's records of expenses relating to the room were destroyed in a major paint spill. How muc home office deduction, if any, will he be allowed?

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Definitions:

Import Quotas

Government-imposed limits on the volume of specific goods that can be imported, aimed at protecting domestic producers by controlling market supply.

Globalization

The integration of national economies into a worldwide economy.

American Consumer

An individual in the United States who purchases goods and services for personal use.

Frederic Bastiat

A 19th-century French economist and writer known for his advocacy of free trade and his witty criticisms of protectionism and socialism.