Frank & Irma have a condo on the beach in Malibu, which they use during July & August (i.e., 60 days) and rent out for 90 days at its fair rental value. Round to the nearest percentage (i.e., 29.65% = 30%). A summary of the rental activity is listed below:

Required: a. Calculate the Schedule E net rental income and the Schedule A - Itemized Deductions using the IRS Method. b. Calculate the Schedule E net rental income and the Schedule A - Itemized Deductions using the Court (Bolton) method. c. Which method should Frank and Irma use to report the rental income and itemized deductions on their Federal Income Tax return? Why?

Income (i.e.,90 days @ \$400ight) \$ 24,000 Expenses: \begin{tabular}{lr} HOA Dues & $2,500 \\ Insurance & 2,000 \\ Interest Expense & 10,000 \\ R \& M & 1,500 \\ Real Estate Taxes & 4,000 \\ Utilities & 3,000 \\ Depreciation & 8,500 \\ \hline \end{tabular} $31.500