rental_activities_solution

rental_activities_solution - Topic: Rental activities...

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Topic: Rental activities [Solution] Part 1: Mixed personal/rental use. Joan owned a cabin near the local ski resort. During the year Joan and her family use the cabin a total of 25 days. Joan also rents the cabin to out-of-state skiers for a total of 50 days during the year generating rental income of $10,000. Joan incurs the following expenses related to the cabin: Expense Amount Property taxes 1,500 Mortgage interest 3,000 Utilities 2,000 Insurance 1,500 Security and snow removal 2,500 In addition, Joan would have been entitled to $12,000 of MACRS depreciation if the property had been entirely rental property held for investment purposes. Required : What amounts would Joan report on her tax return? Using the IRS’s position on interest & taxes. Amount Item Calculation Schedule E Schedule A 1 Rental income $10,000 Property taxes 1,500 x 50/75 (1,000) (500) Mortgage interest 3,000 x 50/75 (2,000) (1,000) Utilities 2,000 x 50/75 (1,333) Insurance 1,500 x 50/75 (1,000) Security & removal
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rental_activities_solution - Topic: Rental activities...

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