58 LO7 Hromas uses a separate room in his home as an office. The room...
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58 LO7 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 Mortgage interest $12,000 Property taxes 1,400 Insurance 450 Utilities Gas and electric $2,100 Cable TV 280 Phone ($15 per month for a separate phone number for the office 450 2,830 House cleaning 1,820 Long-distance phone calls (business-related) 670 Depreciation (unallocated) 5,600 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 S33,000, 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 marily 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 S80,000 per year. He is not paid extra for the time he spends working at home
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