Prepare a state tax return, Taxation

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David builds and maintains web applications for a number of clients. He does a majority of his work from his home office, but he frequently drives to the client site to meet with his clients. Occasionally, he meets with his clients in his home office. David's home office occupies 400 square feetof their 4,000 square foot home. The home was built at a cost of $350,000 on a lot previously acquired for $75,000. The Smiths moved into the home on May 10, 2008. As to business use, depreciation has been based on MACRS. Besides home mortgage interest and property taxes, residence expenses for 2011 are summarized below.

Utilities                                                 $4,200

Cleaning service                                 2,400

Home security system                     1,200

Homeowner's insurance                2,100

Repair to drywall in office                  750

 

In addition, David has office supplies expense of $800 and a dedicated phone line at a cost of $600. For use in his business, David purchased a laptop for $2,500 on August 4th and a printer for $400 on March 7th. Except for his vehicle, David opts to maximize his depreciation deductions whenever possible.


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