David is a college professor who does some consulting work on the side. He uses
ID: 2363942 • Letter: D
Question
David is a college professor who does some consulting work on the side. He uses 25% of his home exclusively for the consulting practice. He is single and 63 years old. His AGI (without consideration of consulting income) is $45,000.00. Other information follows: Income from consulting business $4000.00 Consulting expenses other than home office $1500.00 Total costs relating to home: Interest and taxes $6500.00 Utilities $1500.00 Maintenance and repairs $ 450.00 Depreciation (business part only) $1500.00 Calculate DavidExplanation / Answer
David is a college professor who does some consulting work on the side. He uses 25% of his home exclusively for the consulting practice. He is single and 63 years old. His AGI (without consideration of consulting income) is $45,000. Other information follows:
Income from consulting business $4,000
Consulting expenses other than home office $1,500
Total costs relating to home
Interest and taxes $6,500
Utilities $1,500
Maintenance and repairs $ 450
Depreciation (business part only) $1,500
Calculate David’s AGI.
Answer:
AGI before business $45,000
Business Proceeds $4,000
Business Expenses -$1,500
Interest & Taxes -$1,625*
Utilities -$ 375
Main. And Repairs -$ 113
Depreciation limited to $387 -$ 387
Net Business Income 0
AGI $45,000
*75% of this amount would be deductible on Schedule A as an itemized deduction.
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