Alex and Phyllis celebrated their $5$th wedding anniversary and their $30$th birthdays this year. The couple met at the local supermarket where they are employed full$-$time. The following information concerning income and possible income is provided to you concerning the couple.

$1.$ For the current tax year, Alex$’$s wages were $$53,000$ and Phyllis$’$s wages were $$47,000.$ The couple$’$s employer provides group$-$term life insurance in the amount of the employee$’$s wages.

$2.$ Ten years ago, Phyllis received an acre of land as an inter vivos gift from her grandfather. At the time of the gift, the land had an FMV of $$50,000.$ The grandfather$’$s adjusted basis was $$60,000.$ Phyllis sold the land during the current tax year to an unrelated third party for $$56,000.$

$3.$ The couple received a stock dividend from the Ace Corporation. The couple had the option to receive cash or the stock. They chose the stock, which had a fair market value of $$900$ on the date of distribution. The par value of the stock was $$500.$

$4.$ The couple reviewed their bank statements and saw that they received $$58$ in interest on their checking and savings accounts. However, the bank did not send them a $1099-$INT.

$5.$ Phyllis received $$10,000$ when she redeemed her Series EE bonds during the year. Phyllis was given the bonds for her birthday $23$ years ago; the cost of the bonds was $$3,500.$ The entire $$10,000$ proceeds were used for college tuition by the couple during the year.

$6.$ In May, the couple received a tax refund for overpayment of their prior year$’$s income taxes: $$2,500$ from the IRS and $$1,250$ from the state revenue department. The couple$’$s AGI was $$80,000$ in the prior year. The couple itemized last year because their itemized deductions exceeded the standard deduction by $$950.$

$7.$ Alex and Phyllis contributed $$600$ apiece to their traditional IRA and another $$600$ apiece to their Roth IRA.

Rental Property

Alex and Phyllis also leased out two rental properties, which they solely maintain, to graduate students attending the local university. The following information pertaining to the rental properties is given:

$1.$ Property A was rented on April $1$ for $$900$ per month. In addition, the tenant paid $$900$ as a security deposit with his first rent payment. The security deposit will be returned at the end of the first year. The property was vacant during the first three months of the year.

$2.$ Property B has been continuously rented for the past two years. The current tenant pays $$750$ per month. Along with his December rent, the tenant prepaid the first two months $($$$1,500)$ of next year. In addition, he made repairs to the property in lieu of paying his October rent payment.

$3.$ The insurance policies were paid on January $3$ of the current year, and they cover this year and next year.

In addition to the above rental income information, the following expenses were incurred by Alex and Phyllis on the properties:

Alex and Phyllis's Rental Property Expenses

Property A Property B

Expenses:

Advertising $ $350$  $ $0$ 

Cleaning $4250$ 

Insurance coverage $720560$ 

Repairs $6250$ 

Painting $3000$ 

Mortgage interest $2,8002,400$ 

Property taxes $2,8002,200$ 

Property depreciation $2,1001,500$ 

Travel costs to the properties $125100$ 

Complete Schedule E below by putting the proper amounts in the indicated cells. If the value of a cell is zero, you must enter a zero $("0")$ to receive credit for your answer. Use dollar amounts only $($i$.$e$.,$ no cents$).$

Schedule E $-$ Supplemental Income and Loss

Income: Properties Totals

A B C

$3$ Rents received $3030$ 

$4$ Royalties received $4040$ 

Expenses:

$5$ Advertising $50$ 

$6$ Auto and travel $60$ 

$7$ Cleaning and maintenance $70$ 

$9$ Insurance $90$ 

$12$ Mortgage interest $120120$ 

$14$ Repairs $140$ 

$16$ Taxes $160$ 

$17$ Utilities $170$ 

$18$ Depreciation expense $180$ 

$19$ Other $190$ 

$20$ Total Expenses Add lines $5-1920000200$ 

$26$ Income or $($loss$)260$