Alfredo Is Self-Employed and He Uses a Room in His

question 75

Essay

Alfredo is self-employed and he uses a room in his home as his principal place of business. He meets clients there and doesn't use the room for any other purpose. The size of his home office is 600 square feet. The size of his entire home is 3,000 square feet. During the current year, Alfredo received $12,200 of gross income from his business activities, and he reports $9,150 of business expenses unrelated to his home office. For his entire home, he reported $10,400 of mortgage interest, $4,200 of property taxes, $3,600 of home operating expenses, and $7,150 of depreciation expense.Alfredo itemizes deductions, and the sum of his itemized deduction for non-home business taxes and the real property taxes allocated to business use of the home is less than $12,200. What amount of home office expenses is Alfredo allowed to deduct in the current year? (Assume he uses the actual expense method of computing home office expenses.)Indicate the amount and type of expenses he must carry over to next year, if any.

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Definitions:

SWOT Analysis

A strategic planning tool used to identify a company's Strengths, Weaknesses, Opportunities, and Threats.

Concentration Strategy

A business approach focusing on a single line of products or services to achieve competitive advantage and growth.

Business Area

A specific domain within an organization or market where distinct products or services are developed, marketed, and managed.

Industry Environmental Factors

External influences that affect an industry’s performance, including economic, technological, legal, and socio-cultural elements.