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Rita owns a sole proprietorship in which she works as a management consultant. She maintains an...

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Accounting

Rita owns a sole proprietorship in which she works as amanagement consultant. She maintains an office in her home (500square feet) where she meets with clients, prepares bills, andperforms other work-related tasks. Her business expenses, otherthan home office expenses, total $5,820. The following home-relatedexpenses have been allocated to her home office under the actualexpense method for calculating home office expenses.

Real property taxes$1,710
Interest on home mortgage5,265
Operating expenses of home855
Depreciation1,666


Also, assume that, not counting the sole proprietorship, Rita’sAGI is $62,200.

Assume Rita’s consulting business generated $15,550 in grossincome. (Leave no answer blank. Enter zero ifapplicable.)

a. What would Rita’s home office deduction be if her businessgenerated $10,550 of gross income instead of $15,550? (Answer forboth the actual expense method and thesimplified method.)

b. Given the original facts, what is Rita’s AGI for theyear?

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