Melanie is employed full-time as an accountant for a national hardware chain. She recently started a private consulting practice, which provides tax advice and financial planning to the general public. For this purpose, she maintains an office in her home. Expenses relating to her home are as follows:

Real property taxes ................ $3,600

Interest on home mortgage .............3,800

Operating expenses of home ........... 900

Depreciation allocated to 20% business use .....1,500

Melanie’s income from consulting is $17,000, and the related expenses are $5,000.

a. What is Melanie’s office in the home deduction?

b. Suppose Melanie also spends $4,000 to repaint and to replace the carpet in the office. How do these additional costs change the answer to part (a)?

c. Suppose Melanie’s income from consulting is only $8,000 (not $17,000). How does this change the answer to part (a)?