Hromas uses a separate room in his home as an office. The room is 500 square feet of the total 2,000 square feet in the house. During the current year, Hromas incurs the following household expenses:

How much of a deduction is Hromas allowed for the cost of the home office in each of the following situations?
a. Hromas is an independent salesperson who uses the room exclusively to call customers who buy goods from him. During the current year, his sales total $83,000, cost of goods sold is $33,000, and he incurs other valid business expenses unrelated to the office of $25,000.
b. Hromas is an employee of Ace Computer Company. He uses the office primarily when he brings work home at nights and on weekends. He occasionally uses the office to pay personal bills and to study the stock market so he can make personal investments. His salary at Ace is $80,000 per year. He is not paid extra for the time he spends working athome.

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Mortgage interest Property taxes Insurance Utilities $12,000 1,400 450 Gas and electric Cable TV Phone ($15 per month for a separate $2,100 280 phone number for the office 2,830 1,820 670 5,600 450 House cleaning Long-distance phone calls (business-related) Depreciation (unallocated)