Textbook Problems - Week 4

Use the following facts to answer problems 64 and 65.

Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:

Insurance	$1,000
Advertising expense	500
Mortgage interest	3,500
Property taxes	900
Repairs & maintenance	650
Utilities	950
Depreciation	8,500

Problem 64. Assume Natalie uses the IRS method of allocating expenses to rental use of the property.

a) What is the total amount of for AGI (rental) deductions Natalie may deduct in the current year related to the condo?

b) What is the total amount of itemized deductions Natalie may deduct in the current year related to the condo?

c) If Natalie's basis in the condo at the beginning of the year was $150,000, what is her basis in the condo at the end of the year?

d) Assume that gross rental revenue was $2,000 (rather than $10,000). What amount of for AGI deductions may Natalie deduct in the current year related to the condo?

e) Using the original facts, complete Natalie's Form 1040, Schedule E, for this property. Also, partially complete Natalie's 1040, Schedule A, to include her from AGI deductions related to the condo.

65. Assume Natalie uses the Tax Court method of allocating expenses to rental use of the property.

a) What is the total amount of for AGI (rental) deductions Natalie may deduct in the current year related to the condo?

b) What is the total amount of itemized deductions Natalie may deduct in the current year related to the condo?

c) If Natalie's basis in the condo at the beginning of the year was $150,000, what is her basis in the condo at the end of the year?

d) Assume that gross rental revenue was $2,000 (rather than $10,000). What amount of for AGI deductions may Natalie deduct in the current year related to the condo?