369 6/714 Schedule e Case Study Mona J. Barber Log in to the BlockWorks PRACTICE mode and open Shell return SSN 747-63-1902 for Mono J. Barber. Blockworks will create a unique SSN, which should be used to prepare a 2016 Schedule E(Form 1040 for Mona. Any of Mona's information that is not associated with the Schedule (Form 1040) has already been pre-entered for you. Mona wants to compare Schedule E(Form 10401 results when the special/bo- nus depreciation allowance is elected versus when it is not. Therefore, prepare returns for both scenar- 10s. She does want to take advantage of the de minimis safe harbor election, if any of the new property qualifies. Rental Information Mona has rented in single family home at 1947 Pinnacle Street, Your City, YS XXXXX, to various tenants since September 3, 2001, when the converted the house from personal to rental property. At that time, the adjusted basis of the house was $154,000, including land value of $11,600, and the fair market value (FMV) of the house was $14,000, including land value of $11,600. Mona does not meet the statutory requirements to be considered a real estate professional, and she materially participated in the rental activity. She received $1,020 per month in rent for all 12 months during the current tax year. The back yard fence fell into disrepair in June 2016, and she replaced it for an advertised special of $8,399 on June 27, 2016. She also replaced the kitchen stove for $492 on September 19, 2016. Both of the original assets had been fully depreciated. Regarding the new assets, electing to use the special depreciation allowance may benefit her this year, but she wants to consider the long-term benefit of how this would impact the profit or loss from the rent- al property in subsequent years. Mona also incurred the following expenses associated with the rental property: Yard maintenance: $480 Insurance: $2,520 Tax preparation fees: 8500 Mortgage interest: $3,572 Repairs: $650 Real estate taxes: $1938 Exterminator: $88 Rental license: $55 After return preparation has been completed, return to the test and answer the associated questions. If Mona elects to opt out of special depreciation for the new fence, what is her net profit or loss on the rental house? O ($3,152) O ($3,343) O ($3,362) O ($3.653) Mark for follow up Back Save / Return Later Summary Next