Mr. Ben Barns wanted to start a home based business that would specialize in selling t-shirts. The business would be operated from his principal residence. He set aside 20% of the total floor space in the residence for the t-shirt operations.Mr. Ben Barns’ principal residence, costing $ 950,000 in total, was acquired on January 01, 2016. It is estimated that $ 350,000 of this total value can be attributed to the land value.Mr. Ben Barns incurred the following 2016 costs relating to the principal residence:· $ 2,500 Utilities for The Home (Heat, Light, And Water)· $ 7,000 Mortgage Interest Paid· $ 4,500 House Insurance· $ 8,000 Property Taxes· $ 6,000 Repairs & Maintenance For The Home————$28,000 Total CostsThe business commenced operations on March 01, 2016. On that date, Mr. Ben Barns purchased the following assets to be used in his new business:· $30,000 Office Furniture & Storage Shelving· $ 3,000 Computer· $ 1,000 Business SoftwareIn addition, Mr. Ben Barns had a separate telephone line installed for dealing with the mail order business.During the period March 01, 2016 through December 31, 2016, Mr. Ben Barns’ mail order sales totaled $ 450,000. Costs associated with these sales included the following:· $250,000 Cost of Merchandise Sold· $ 50,000 Unsold Merchandise (Lower of Cost and Fair Market Value)· $ 7,000 Packaging Materials· $ 10,000 Mailing Costs· $ 4,000 Office Supplies· $ 3,000 Telephone Charges· $ 6,000 Printing Of BrochuresRequired:A. Can Mr. Ben Barns deduct work space in the home costs? Briefly explain your decision.B. Calculate Mr. Ben Barns’ 2016 minimum net business income or loss that he will report on his 2016 income tax return.Briefly discuss any issues that should be discussed with Mr. Ben Barns regarding the work space in his home and business costs
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