Jim operates a business out of his home. One room in his home is used for business and qualifies as a home office. Which of the following allocable expenditures can Jim use in computing his home office expense deduction?
I.Jim pays his housekeeper $25 a week to sweep, dust and straighten-up his office.
II.Jim's fire and casualty insurance premiums on his home are $800.

A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Question

Jim operates a business out of his home. One room in his home is used for business and qualifies as a home office. Which of the following allocable expenditures can Jim use in computing his home office expense deduction?
I.Jim pays his housekeeper $25 a week to sweep, dust and straighten-up his office.
II.Jim's fire and casualty insurance premiums on his home are $800.
​
A)Only statement I is correct.
B)Only statement II is correct.
C)Both statements are correct.
D)Neither statement is correct.

Quizplus · Accepted Answer

Statement I is correct because Jim can deduct a portion of his housekeeping expenses that are directly related to the home office. 
Statement II is correct because Jim can deduct a portion of his fire and casualty insurance premiums as a home office expense.

Jim Operates a Business Out of His Home