2B. Professor Patricia (Patty) Pate is retired from the Palm Springs Culinary Arts Academy (PSCAA). She is

2B. Professor Patricia (Patty) Paˆte´ is retired from the Palm Springs Culinary Arts Academy

(PSCAA). She is a single taxpayer and is 68 years old. Patty lives at 98 Colander Street, Henderson, NV 89052. Professor Paˆte´ ’s Social Security number is 565-66-9378. Patty receives monthly retirement benefits from her PSCAA retirement plan. Earnings and income tax withholding shown on her retirement 2010 Form 1099-R are:

Gross distribution and taxable amount $61,200 Federal tax withheld 7,350 State tax withheld 0 Patricia owns a rental condo located at 392 Spatula Way, The Lakes, NV 88905.

The condo rents for $850 per month and was rented for the entire year. The following are the related expenses for the rental house:

Real estate taxes $2,725 Mortgage interest 7,500 Insurance 410 Depreciation (assume fully depreciated) 0 Home Owners’ Association dues 1,540 Repairs 1,300 Gardening 2,090 The condo was purchased on August 31, 1976. Professor Paˆte´ handles all rental activities (e.g., rent collection, finding tenants, etc.) herself.
During March 2010, Patricia took a $75,000 distribution from her 401(k) plan (which is not included in the Form 1099-R above). Patricia received only $60,000 because the 401(k) plan administrators withheld $15,000 federal income tax from the distribution. Forty-five days after the distribution, Patty deposited $50,000 in a rollover IRA, keeping $10,000 of the $60,000 received in order to remodel her kitchen.
Required: Complete Professor Paˆte´ ’s federal tax return for 2010. Use Form 1040, Schedule E, Form 8582, Schedule M, and any other appropriate schedule(s) from pages 3-53 through 3-58 to complete this tax return. Do not complete Form 4562 for reporting depreciation. Make realistic assumptions about any missing data.