Questions:

1. Calculate the vacation home amount that will be reported on line 26 of Schedule E (IRS approach).

2. Would you advise your client, The Bidings, to itemize or take the standard deduction?

Joe and Jill Biding are married taxpayers who live at 666, Cooperation Drive, Washington, DC. Joe is 65 years old, while Jill is 48. Their social security numbers are 123-45-6789 (Joe) and 123-45-6781 (Jill). The taxpayers elect to contribute to the election campaign fund.

They have a daughter, Yellen, who is 20 years old, goes to college full-time and worked in the summer earning $4,500 (ss# 424-77-6666). She also had unearned income of $2,000 in 2022.

Joe is a lobbyist for the Politico Corporation, which has an excellent retirement plan for its employees (Joe participates in plan). Joe and Jill receive their health and dental insurance through Politico Corporation. His form W-2 shows his annual salary, federal income tax withholdings, and state income tax withholdings.

Wages $ 530,000

Federal Withholding Taxes 145,000

State Withholding Taxes 28,000

During 2022, Joe and Jill received interest and dividend (total and qualified) income from several institutions. This information is summarized below from their Forms 1099-DIV and 1099-INT. In addition, Jill received $10,000 interest on New York City bonds.

Bank for Savings (Interest) $ 5,001

Oversees Corporation (Dividend) 3,450

Do Not Bribe Me Corporation (Dividend) 2,360

Do Not Bribe Me Corporation (Long Term Capital Gain Distribution) 1,500

Joe and Jill's personal records indicate that the following personal expenses were incurred in 2022.

Trips to Los Angeles

airfare and lodging. . . . . . . $ 15,549

while meals. . . . . . . . . . . . . . . . . . .. . . . . 5,018

entertainment. . . . . . . . . . . . . . . . . .. . . . . 3,293 (trips were to visit family members)

Preparation fee for 2021 tax return (paid in 2022) . . . . 6,740

Health insurance premiums for the family . . . . . . . . . 9,005

Unreimbursed physician charges . . . . . . . . . . . . . . 5,013

Property taxes . . . . . . . . . . . . . . . . . . . . . . 3,450

Sales taxes . . . . . . . . . . . . . . . . . . . . . . . 10,422

Prescription drugs . . . . . . . . . . . . . . . . . . . . 1,848

Non-prescription drugs . . . . . . . . . . . . . . . . . . 5,823

Contributions made in cash to United Way . . . . . . . . . 6,053 Contributions made in cash to qualified charity . . . . . 1,383

Home mortgage interest (qualifying residential) . . . . . 15,834

Home mortgage interest on Condominium (secondary home) . . . . . . . . . . 4,949

Credit Card interest . . . . . . . . . . . . . . . . . . . 29,375

Job hunting expenses . . . . . . . . . . . . . . . . . . . 5,098

Personal property tax on value of personal autos . . . . . 1,500

Estimated state income tax payments by Jill in 2022 . . . . 6,000

Contributions of LT capital gain property (stock) . . . . . Cost 5,437 (to a qualified charity who sold it immediately)

FMV 10,820

Groceries . . . . . . . . . . . . . . . . . . . . . . . . . 8,186

Joe and Jill incurred the following transactions involving capital assets in 2022. On May 8, 2022, Jill sold 600 shares of iTeach Corporation stock. Her basis in the stock was $7,220 (May 12, 1998) and she sold it for $18,200. On February 3, 2022, the Bidings sold 2,000 shares of Commodity stock for $12,654. Joe had inherited the stock from his grandmother. His grandmother had originally purchased it for $4,000 on June 12, 1999. The stock was worth $6,937 on the date of her death. On October 30, 2022, the Bidings discovered that their 1,000 shares of Bad Corporation stock was worthless. Jill had purchased the shares for $12,000 in 2004. On December 5, 2022, Joe sold a personal car that he had purchased from his dad for $8,000 on December 4, 2008. He sold it for $1,300. The Bidings own and rent-out another vacation house in Wilmington, Delaware which was used for personal purposes by the Bidings for 29 days and rented for 101 days. They received rents of $28,565 in 2022. Their expenses are as follows: cleaning and maintenance, $6,890; commissions, $3,500; real estate taxes, $8,501; utilities $6,092 and insurance $3,000. Their house was acquired on June 30, 2013 for $1,300,000. They spend less than 20 hours per year dealing with the rental property.