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2 April, 00:06

Alex is a self-employed dentist who operates a qualifying office in his home. Alex has $180,000 gross income from his practice and $160,000 of expenses directly related to the business, i. e., non-home office expenses. Alex's allocable home office expenses for mortgage interest expenses and property taxes are $14,000 and other home office expenses are $9,000. What is Alex's total allowable home office deduction?

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  1. 2 April, 03:08
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    The correct answer is $20,000.

    Explanation:

    According to the scenario, the given data are as follows:

    Gross income = $180,000

    Business expense = $160,000

    Mortgage interest and property taxes expense = $14,000

    Other home office expense = $9,000

    So, we can calculate the total allowable home office deduction by using following method:

    As we know, first we have to deduct the business expense from the gross income and than if there any net income left than other expense can be deducted.

    Hence,

    = Gross income - Business expense

    = $180,000 - $160,000

    = $20,000
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