Exercise 11-31 (Algorithmic) (LO. 8)

Noah Yobs, who has $62,200 of AGI (solely from wages) before considering rental activities, has $55,980 of losses from a real estate rental activity in which he actively participates. He also actively participates in another real estate rental activity from which he has $31,100 of income. He has other passive activity income of $19,904.

a. What amount of rental loss can Noah use to offset active or portfolio income in the current year? $

b. Complete Noah's Form 1040 (page 1) for the current year. Use the minus sign to indicate a loss.

Form 1040 Department of the TreasuryInternal Revenue Service (99) U.S. Individual Income Tax Return 2017 OMB No. 1545-0074 IRS Use OnlyDo not write or staple in this space.

For the year Jan. 1Dec. 31, 2017, or other tax year beginning ,2017, ending ,20 See separate instructions. Your first name and initial Noah Last name Yobs Your social security number 123-45-6789 If a joint return, spouse's first name and initial Last name Spouse's social security number Home address (number and street). If you have a P.O. box, see instructions. Apt. no. Make sure the SSN(s) above and on line 6c are correct. City, town or post office, state, and ZIP code. If you have a foreign address, also complete spaces below (see instructions). Presidential Election Campaign Check here if you, or your spouse if filing jointly, want $3 to go to this fund. Checking a box below will not change your tax or refund. You Spouse Foreign country name Foreign province/state/country Foreign postal code

Filing status Check only one box.

1 Single 2 Married filing jointly (even if only one had income) 3 Married filing separately. Enter spouse's SSN above and full name here.

4 Head of household (with qualifying person). (See instructions.) If the qualifying person is a child but not your dependent, enter this child's name here. 5 Qualifying widow(er) (see instructions)

Exemptions 6a Yourself. If someone can claim you as a dependent, do not check box 6a . . . }

Boxes checked on 6a and 6b No. of children on 6c who: lived with you did not live with you due to divorce or separation (see instructions)

Dependents on 6c not entered above

Add numbers on lines above

b Spouse . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . If more than four dependents, see instructions and check here. c Dependents: (2) Dependent's social security number (3) Dependent's relationship to you (4) If child under age 17 qualifying for child tax credit (see instructions)

(1) First name Last name

d Total number of exemptions claimed . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Income Attach Form(s) W-2 here. Also attach Forms W-2G and 1099-R if tax was withheld. If you did not get a W-2, see instructions. 7 Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 8a Taxable interest. Attach Schedule B if required . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8a b Tax-exempt interest. Do not include on line 8a . . . . . . . . 8b 9a Ordinary dividends. Attach Schedule B if required . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9a b Qualified dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9b 10 Taxable refunds, credits, or offsets of state and local income taxes . . . . . . . . . . . . . . . . 10 11 Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 12 Business income or (loss). Attach Schedule C or C-EZ . . . . . . . . . . . . . . . . . . . . . . . . . . 12 13 Capital gain or (loss). Attach Schedule D if required. If not required, check here . . . 13 14 Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 15a IRA distributions . . . . . . . . . . 15a b Taxable amount . . . 15b 16a Pensions and annuities . . . . . 16a b Taxable amount . . . 16b 17 Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E 17 18 Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18 19 Unemployment compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 20a Social security benefits . . . . . . 20a b Taxable amount . . . 20b 21

Other income. List type and amount

21 22 Combine the amounts in the far right column for lines 7 through 21. This is your total income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Adjusted Gross Income 23 Educator expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 24 Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 or 2106-EZ . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24 25 Health savings account deduction. Attach Form 8889 . . . . 25 26 Moving expenses. Attach Form 3903 . . . . . . . . . . . . . . . . . 26 27 Deductible part of self-employment tax. Attach Schedule SE 27 28 Self-employed SEP, SIMPLE, and qualified plans . . . . . . . . . 28 29 Self-employed health insurance deduction . . . . . . . . . . . . . 29 30 Penalty on early withdrawal of savings . . . . . . . . . . . . . . . . 30 31a Alimony paid b Recipient's SSN 31a 32 IRA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 33 Student loan interest deduction . . . . . . . . . . . . . . . . . . . . . 33 34 Reserved for future use . . . . . . . . . . . . . . . . . . . . . . . . . . 34 35 Domestic production activities deduction. Attach Form 8903 35 36 Add lines 23 through 35 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 37 Subtract line 36 from line 22. This is your adjusted gross income . . . . . . . . . . . . . 37

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions. Cat. No. 11320B Form 1040 (2017)