1.Cindy maintains an office in her home that comprises 8% (200 square feet) of total floor space. Gross income for her business is $42,000, and her residence expenses are as follows: Real property taxes $2,400 Interest on mortgage 4,000 Operating expenses 2,200 Depreciation (based on 8% business use) 450 What is Cindy’s office in the home deduction based on: The Regular Method? The Simplified Method?
2.On July 1, 2016, Rex purchases a new automobile for $40,000. He uses the car 80% for business and drives the car as follows: 8,000 miles in 2016, 19,000 miles in 2017, 20,000 miles in 2018, and 15,000 miles in 2019. Determine Rex’s basis in the business portion of the auto as of January 1, 2020, under the following assumptions: Rex uses the automatic mileage method. Rex uses the actual cost method. [Assume that no § 179 expensing is claimed and that 200% declining-balance cost recovery with the half-year convention is used—see Chapter 8. The recovery limitation for an auto placed in service in 2016 is as follows: $3,160 (first year), $5,100 (second year), $3,050 (third year), and $1,875 (fourth year).]
3.On Thursday, Justin flies from Baltimore (where the office for his sole proprietorship is located) to Cadiz (Spain). He conducts business on Friday and Tuesday; vacations on Saturday, Sunday, and Monday (a legal holiday in Spain); and returns to Baltimore on Thursday. Justin was scheduled to return home on Wednesday, but all flights were canceled due to bad weather. As a result, he spent Wednesday watching floor shows at a local casino. For tax purposes, what portion of Justin’s trip is regarded as being for business? Suppose Monday was not a legal holiday. Would this change your answer to part (a)? Explain. Under either part (a) or (b), how much of Justin’s airfare qualifies as a deductible business expense?
4.Harvey is a self-employed accountant with earned income from the business of $120,000 (after the deduction for one-half of his self-employment tax). He uses a defined contribution Keogh plan. What is the maximum amount Harvey can contribute to his retirement plan in 2020?
4.Jimmy establishes a Roth IRA at age 47 and contributes a total of $89,600 over 18 years. The account is now worth $112,000. How much of these funds may Jimmy withdraw tax-free?
Please complete the assigned problems using MS-Excel
