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. $2,100 Mortgage interest.

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

Insurance. $2,100

Mortgage interest. 9,300

Property taxes 3,300

Repairs & maintenance600

Utilities 3,300

Depreciation 15,800

During the year, Alexa rented out the condo for 158 days. Alexa's 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 158 days, Alexa uses the condo for 8 days of personal use. Also assume that Alexa receives $40,750 of gross rental receipts and her itemized deductions exceed the standard deduction before considering expenses associated with the condo, and that her itemized deduction for non-home business taxes is less than $10,000 by more than the real property taxes allocated to rental use of the home. Answer the following questions:

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

a.What is the total amount offorAGI 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.

Gross rental income$. 40,750

Expenses:

Insurance. $1,999

Mortgage interest. 8,852

Property taxes. 3,141

Repairs & maintenance 571

Utilities. 3,141

Depreciation. 15,039

Total expenses 32,743

Balancenet rental income. $8,007

Total "for AGI" deductions$. 32,743

These numbers are from taking the expense and multiplying it by Total rental days/total days used. (the IRS method)

For example, insurance expense 2100(158 days/166 days) = 1999 rental insurance expense.

I'm having trouble finding part b, from AGI deductions.

b.What is the total amount offromAGI 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 answer to the nearest whole dollar amount.)

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_2

Step: 3

blur-text-image_3

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

Core Concepts Of Accounting

Authors: Leslie Breitner, Robert Anthony

11th Edition

0133125947, 9780133125948

More Books

Students also viewed these Accounting questions

Question

=+c) What do you conclude about the average value of the

Answered: 1 week ago

Question

What reward will you give yourself when you achieve this?

Answered: 1 week ago