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John represents several national casualty insurance companies on a contract basis. He is paid a retainer and receives additional compensation if the claims for the year exceed a specified number. As an independent contractor, he is responsible for whatever expenses he incurs. Karl works out of an office near his home. The office is located at 1202 Brentwood Avenue. He shares Suite 326 with a financial consultant, and operating expenses are divided equally between them. The suite has a common waiting room with a receptionist furnished and paid by the landlord. Karl’s one-half share of the 2011 expenses he paid is listed below.
Office rent
$11,600
Utilities (includes telephone and fax)
4,300
Replacement of waiting room furniture on April 22
3,600
Renters’ insurance (covers personal liability, casualty, and theft)
1,400
Office expense (supplies and postage meter)
740
New Toshiba copier (less trade-in on old machine) on February 7
300
Waiting room coffee service (catered)
280
Waiting room magazine subscriptions
90
For his own business use, Karl purchased a laptop computer for $2,100 on June 17 and a Nikon camera for $1,200 on February 5. Except for his vehicle (see item 2), John uses the § 179 write-offoption whenever possible.
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