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15 February, 04:40

Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo: Insurance $ 1,000 Advertising expense 500 Mortgage interest 3,500 Property taxes 900 Repairs & maintenance 650 Utilities 950 Depreciation 8,500 During the year, Natalie rented out the condo for 75 days, receiving $10,000 of gross income. She personally used the condo for 35 days during her vacation. Assume Natalie uses the Tax Court method of allocating expenses to rental use of the property. Assume 365 days in the current year. (Do not round apportionment ratio. Round all other dollar values to the nearest whole dollar amount.)

Using the original facts, complete Natalie's Form 1040, Schedule E, for this property. Also, partially complete Natalie's 1040, Schedule A, to include her from AGI deductions related to the condo.

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  1. 15 February, 08:05
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    Answer and Explanation:

    Natalie's Gross Income = $10,000

    75 + 35 = 110 days

    Expenses:

    Insurance Expense (75/110) x 1000 682

    Advertising Expense 500

    Mortgage Interest (75/110) x 3500 2386

    Property Taxes (75/110) x 900 614

    Repairs and Maintenance (75/110) x 650 443

    Utilities (75/110) x 950 648

    Depreciation (75/110) x 8500 5795

    Until the depreciation expenses the total expenses accumulate to 5273. If we deduct that with the gross income total we get 4727. We can only deduct 4727 from the total portion of 5795 depreciation expense.

    Therefore, for AGI deductions we take total of (5273 + 4727) = $10,000

    For Natalie's personal deduction of AGI

    Mortgage interest (35/110) x 3500 1114

    Property taxes (35/110) x 900 286

    Total personal deduction for AGI $1400
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