Fran Is a CPA Who Has a Small Tax Practice

question 116

Multiple Choice

Fran is a CPA who has a small tax practice in addition to working as the controller for a local manufacturing business. Fran runs her tax practice out of a 150 square foot office in her home where she meets clients and works on their tax returns and researches their tax issues. She meets the exclusive use test for this space. The gross income from her tax practice amounts to $7,500 for the year. Business expenses amount to $1,000. Based on square footage, $4,000 of Fran's mortgage interest and real estate taxes are allocable to the home office. The allocable portion of maintenance, utilities, and depreciation is $4,500. Assuming no other expenses related to the business were incurred, what amount of the maintenance, utilities, and depreciation is deductible by Fran?

• A) $0.
• B) $2,500.
• C) $3,500.
• D) $4,500.
• E) None of the above.

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Definitions:

Undifferentiated Attribution

The tendency to ascribe similar characteristics or motives to a group without recognizing individual differences within the group.

Stereotype

A widely held but fixed and oversimplified image or idea of a particular type of person or thing.

Cultural Racism

The belief that the cultural ways of one group are superior to those of another.

Norms

The unwritten rules or expectations that govern the behavior of members within a society or group, guiding what is considered acceptable or customary.