Fran is a cpa who has a small tax practice in addition to working as the controller for a local manufacturing business. fran runs her tax practice out of a 150 square foot office in her home where she meets clients and works on their tax returns and researches their tax issues. she meets the exclusive use test for this space. the gross income from her tax practice amounts to $7,500 for the year. business expenses amount to $1,000. based on square footage, $4,000 of fran’s mortgage interest and real estate taxes are allocable to the home office. the allocable portion of maintenance, utilities, and depreciation is $4,500. assuming no other expenses related to the business were incurred, what amount of the maintenance, utilities, and depreciation is deductible by fran?

a. $0.

b. $2,500.

c. $3,500.

d. $4,500.

e. none of the above.

under the deemed substantiation method of accounting for expenses, what is the maximum amount taxpayers are allowed as a deduction without being required to substantiate the amount of the expenses?

a. the appropriate federal per diem amount.

b. $75 per day.

c. all expenses up to $25 per day.

d. the per diem rate established by the state in which they live.

e. none of the above

marsha is single, had a gross income of $50,000, and incurred the following expenses: charitable contribution $2,000 taxes and interest on home $7,000, $3,000 legal fees incurred in a tax dispute medical expenses $1,000 penalty on early withdrawal of savings $250

her agi is:

a. $39,750.

b. $49,750.

c. $40,000.

d. $39,750.

e. none of the above