Question: Use the following facts to answer problems 64 and 65 . Rita owns a sole proprietorship in which she works as a management consultant. She

 Use the following facts to answer problems 64 and 65 .

Use the following facts to answer problems 64 and 65 . Rita owns a sole proprietorship in which she works as a management consultant. She maintains an office in her home ( 500 square feet) where she meets with clients, prepares bills, and performs other work-related tasks. Her business expenses, other than home office expenses, total $5,600. The following home-related expenses have been allocated to her home office under the actual expense method for calculating home office expenses. Also, assume that, not counting the sole proprietorship, Rita's AGI is $60,000. Rita itemizes deductions, and her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to business use of the home. 64. Assume Rita's consulting business generated $15,000 in gross income. a) What is Rita's home office deduction for the current year? b) What would Rita's home office deduction be if her business generated $10,000 of gross income instead of $15,000 ? (Answer for both the actual expense method and the simplified method.) c) Given the original facts, what is Rita's AGI for the year? d) Given the original facts, what types and amounts of expenses will she carry over to next year? 65. Assume Rita's consulting business generated $13,000 in gross income for the current year. Further, assume Rita uses the actual expense method for computing her home office expense deduction. a) What is Rita's home office deduction for the current year? b) What is Rita's AGI for the year? c) Assuming the original facts, what types and amounts of expenses will she carry over to next year

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