7. Bobby Brady has a full-time job as an electrical engineer for the city utility. In his spare time, Bobby repairs electronic gear in the basement of his personal residence. Most of his business comes from friends and referrals from former customers, although occasionally he runs an ad in the local suburbia newspaper. Typically, the items are dropped off at Bobbys house and later picked up by the owner when notified that the repairs have been made.

The floor space of Bobbys residence is 2,500 square feet, and he estimates that 20% of this is devoted exclusively to the repair business (i.e., 500 square feet). Gross income from the business is $13,000, while business expenses (other than home office) are $5,000. Expenses relating to the residence are as follows:

Real property taxes	$4,500
Interest on home mortgage	8,000
Operating expenses of residence	3,000
Depreciation (based on 20% business) use)	1,000

What is Bobbys net income (gross income business expenses) from the repair business

1. if he uses the regular (actual expense) method of computing the deduction for office in the home?
2. if he uses the simplified method?