The following additional information is available for the Dr. Ivan and Irene Incisor family. The Incisors own a rental beach house in Hawaii. The beach house was rented for the full year during 2013 and was not used by the Incisors during the year. The Incisors were active participants in the management of the rental. Pertinent information about the rental house is as follows:
Address: 1237 Pineapple St., Lihue, HI 96766
Net rental income......................................$20,350
Mortgage interest.........................................7,800
Real estate taxes..........................................2,400
Utilities.....................................................1,825
Maintenance...............................................3,000
The house is fully depreciated so there is no depreciation expense.
For the 2013 tax year, on March 15, 2014, Ivan contributes $5,500 to a traditional IRA for himself and $5,500 to a traditional IRA for his wife. He is not covered by a qualified retirement plan at work.
Irene had a retirement plan at the job from which she was laid off on January 2, 2013. The plan had a balance of $24,000. On May 10, 2013, Irene had the entire retirement plan balance rolled directly into an IRA at Timador & Embaucar Brokerage, Inc.
Required:
Combine this new information about the Incisor family with the information from Chapters 1-3 and complete a revised 2013 tax return for Ivan and Irene. Be sure to save your data input files since this case will be expanded with more tax information in later chapters. Note that the "Saver's Credit" discussed in LO 4.8, also known as the "Surprise Credit," may apply.