A full-time professor at California State University, Dr. Irene Adler, teaches c

Question

A full-time professor at California State University, Dr. Irene Adler, teaches courses on production, both for small and big-screen. In her 3,000-square foot home she has a room that is solely used for business purposes where she and her students watch and analyze student-created films as part of the university’s graduate program requirements. Though Dr. Adler has on-campus office space, that office is equipped only with office chairs and a small television, whereas her home office has a very large flat screen and much more comfortable seating.

Question: What impact, if any, might this room at home have on Dr. Adler’s personal income tax situation? Discuss any possible allowed or disallowed deduction(s).

To answer this question, use the Internal Revenue Code. You may refer to a textbook but you may not base the answer on the textbook – you must reference the IRC section. What keywords did you use in your search to derive this answer?

Explanation / Answer

Generally, any expenditure of personal nature is disallowed under income tax. But where the assessee proves that the expenditure incurred is 1. Related to business 2. of revenue nature & 3. not Illegal exxpenditure , then that expenditure will be allowed in calculating income of the assessee.

Here as per section 37 of income tax Act, 1961, it will be allowed.

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