Virgil Watson gave his daughter, Holly, a gift of passive activity property. Suspended

losses amounted to $$30,000$ and the property had an adjusted basis of $$40,000.$ Also,

the property had a fair market value of $$75,000$ at the time of the transfer. What is

Holly's basis in the property?

In the current year, Sam Lett purchased a condominium in Hilton Head Island, South

Carolina. Sam and his family used the condominium for a total of $30$ days. The

condominium was rented out a total of $70$ days during the year, generating $$9,000$ of

rental income. Sam incurred the following expenses:

$($a$.)$ Determine Sam's deductible expenses using the IRS approach.

$($b$.)$ How much depreciation can be deducted in the current year if the rental

income was $$12,000?$

$($c$.)$ Does Sam have any options with regard to the interest and taxes?