Regarding the New Simplified Method of Computing the Office in the Home

question 162

Essay

Regarding the new simplified method of computing the office in the home deduction, comment on the following independent factors.
a. Taxpayer has set aside 400 square feet for use as an office.
b. Taxpayer has repainted and recarpeted the office area.
c. In past years, taxpayer has always taken the deduction using the regular (actual expense) method.
d. The net income from the business is not large.

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Definitions:

Bank Reconciliation

The process of matching the balances in an entity's accounting records for a cash account to the corresponding information on a bank statement.

Company's Balance

The total net worth or financial position of a company at a specific point in time, often reflected in the balance sheet.

Balance Per Bank

The ending cash balance in a company's bank account as per the bank's records.

Credit Memo

A document issued by a seller to a buyer, reducing the amount the buyer owes to the seller, typically due to a return or refund.