Rick and Debbie Siravo own a beachfront home in Wrightsville Beach, N.C. During the year, they rent it for 20 weeks (140 days) at $1,100 per week and use it 10 days for personal purposes. Rick actively participates in the management of the property, but does not qualify as a real estate professional. Their adjusted gross income for the year is $137,200 and the costs of maintaining the home for the year are:

Mortgage interest $15,500

Real property taxes 4,500

Management fee 1,085

Insurance 1,200

Utilities 2,200

Cleaning service (only for rental period) 1,500

Repairs and maintenance 700

Depreciation (unallocated) 8,500

Complete Form 1040 Schedule E and Form 8582 using the above information. Ricks Social Security number is 036-87-1458, Debbies Social Security number is 035-11-4856, and the address of the home is 435 Beachway Lane, Wrightsville Beach, NC 28480. Forms and instructions can be downloaded from the IRS Web site (www.irs.gov).