Alexa owns a condo near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:
Insurance $2,000
Mortgage interest 6,500
seat taxes 2,000
Repairs & maintenance 1,400
Utilities 2,500
dispraise 14,500
During the year, Alexa rented out the condo for 100 days. She did non use the condo at entirely for personal purposes during the year. Alexas AGI from all sources different than the term of a contract property is $200,000. Unless otherwise specified, Alexa has no sources of passive income.
61. (LO4) Assuming Alexa receives $20,000 in gross rental receipts, answer the following questions:
a. What effect does the rental activity have on her AGI for the year?
Since Alexa did not use the property for personal student residence and he rented it for more than 100 days, the rental deductions be all deducted for AGI as below:
Gross rental receipt: $20,000
less(prenominal):
Insurance ($2,000)
Mortgage interest ($6,500)
Property taxes ($2,000)
Repairs & maintenance ($1,400)
Utilities ($2,500)
Depreciation ($14,500)
Net rental receipt: ($8,900)
AGI: $200,000- $8,900 = $191,100
b. Assuming that Alexas AGI from other sources is $90,000, what effect does the rental activity have on Alexas AGI? Alexa makes all decisions with respect to the property.
Since Alexa is making all the decisions with respect to the property, at a lower place the real estate exception, she is considered an active owner for a rental property. Active participant in the rental activity are allowed to deduct up to $25,000 of rental loss from their personal income. Since Alexas AGI is less than $100,000, she can deduct the whole amount of $8,900 as an ordinary deduction from her current year income.
$90,000 - $8,900 = $81,100
c. Assuming that Alexas AGI from other sources is $120,000, what effect does the rental activity...If you want to get a full essay, order it on our website: Ordercustompaper.com
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