Problem: Brittney is a broker who works full-time for a national brokerage firm. She also maintains an office in her home for her sole proprietorship, which she uses to provide financial planning services to clients. Expenses of the business (other than home office expenses) are $3,200. Brittany's home expenses are as follows:
Real Property taxes $4,000
Interest on Home Mortgage $5,000
Operating Expenses of Home $1,000
Depreciation (Based on 20% business use) $1,500
Brittany's gross income from the consulting activity is $5,500.
a. Compute Brittany's office in the home deduction.
b. How are these items classified?