Howard, a self-employed consultant, uses one room in his home exclusively and regularly for his home office. The office occupies 360 square feet of floor space in the 2,400 square foot home. Howard’s gross income from his business is $10,000. Expenses of his business (other than home office expenses) are $7,400. Howard has the following home-use expenses: Total mortgage interest on the home $8,000 Total real property taxes on the home 3,000 Utility bills for the home 2,000 Homeowner’s insurance 2,000 Depreciation (15% for the office) 400 How much of these home-use expenses can Howard deduct as home office expenses if he does not elect the simplified method?
a. $15,400
b. $10,000
c. $3,080
d. $2,600