Several years ago, Sydneys mother gifted a house to john and sydney. john and sydney have

rented the house to tenants since their ownership of the house began, and they did so

again for all of $2023.$ The rental property is located at $35$ Main Street, Indianapolis, IN

$46214.$ The current tenant lived in the home for all of $2023.$ Monthly rent is $$1,450.$ Bob

and Sydney began renting the home on January $1,2016,$ and they have earned a small

amount of profit from the activity each year since then. John's mother used the house as

a rental property before giving it to john and sydney. She paid $$120,000$ for the house and

the land in $1996.$ At the time of the gift, sydney mother had adjusted basis in the house

of $$73,210.$ The fair market value of the house and land at the time of the gift was

$$204,500$ and $36,850,$ respectively. john and sydney have been lucky to date and have

never needed to replace any major appliances or components of the home, so there are no

other assets to consider for depreciation. They pay a management company in

Indianapolis to handle rent collection and repairs and maintenance, so they spend less

than $10$ hours per year working on this activity. The following expenses are related to the

rental activity for $2023$:

Expense Amount

Property taxes $$1,483$

Maintenance expenses $720$

Repairs $310$

Insurance expense $2,122$

Management fee $1,588$

Utilities $1,759$

Calculate total rental real estate income on a tax return for $2023$