Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo: Insurance $ 2,000 Mortgage

Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

Insurance $ 2,000
Mortgage interest 6,500
Property taxes 2,000
Repairs & maintenance 1,400
Utilities 2,500
Depreciation 14,500

During the year, Alexa rented out the condo for 100 days. She did not use the condo at all for personal purposes during the year. Alexas AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income.

Assume that in addition to renting the condo for 100 days, Alexa uses the condo for 8 days of personal use. Also assume that Alexa receives $30,000 of gross rental receipts and her itemized deductions exceed the standard deduction before considering expenses associated with the condo. Answer the following questions:

Note that the home is considered to be a nonresidence with rental use.

b. What is the total amount of from AGI deductions relating to the condo that Alexa may deduct in the current year? Assume she uses the IRS method of allocating expenses between rental and personal days. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.).

Would Alexa be better or worse off after taxes in the current year if she uses the Tax Court method of allocating expenses? Better off OR Worse off

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

HRD Audit Evaluating The Human Resource Function For Business Improvement

Authors: RAO

1st Edition

0761993509, 978-0761993506

More Books

Students also viewed these Accounting questions

Question

a neglect of quality in relationship to international competitors;

Answered: 1 week ago