Fundamentals of Taxation 2011 4th Edition by Ana Cruz, Debra Prendergast, Dan Schisler, Michael Deschamps

Exercise 47

Jake runs a business out of his home. He uses 600 square feet of his home exclusively for the business. His home is 2400 square feet in total. Jake had $27,000 of business revenue and $22,000 of business expenses from his home-based business. The following expenses relate to his home:
What is Jake's net income from his business? What amount of expenses is carried over to the following year, if any?
A) ($14,000) and $0 carryover.
B) ($650) and $0 carryover.
C) $0 and $650 carryover.
D) $550 and $0 carryover.