Alexa owns a condominium near Cocoa Beach in Florida. This year, she incurs the

Question

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

During the year, Alexa rented out the condo for 180 days. Alexa’s AGI from all sources other than the rental property is $200,000. Unless otherwise specified, Alexa has no sources of passive income.

Assume that in addition to renting the condo for 180 days, Alexa uses the condo for eight days of personal use. Also assume that Alexa receives $40,250 of gross rental receipts. Answer the following questions: (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

a. What is the total amount of for AGI deductions relating to the condo that Alexa may deduct in the current year? Assume she uses the IRS method of allocating expenses between rental and personal days.

Gross rental income

Expenses:

Insurance

Mortgage interest

Property taxes

Repairs & maintenance

Utilities

Depreciation

Total expenses

Balance—net rental income

Total “for AGI” deductions

b. What is the total amount of from AGI deductions relating to the condo that Alexa may deduct in the current year? Assume she uses the IRS method of allocating expenses between rental and personal days.

Insurance $ 3,300 Mortgage interest 6,750 Property taxes 4,250 Repairs & maintenance 640 Utilities 4,200 Depreciation 20,400

Explanation / Answer

Gross rental income 40250 Expenses: Insurance (3,300*180/188) 3159.57 Mortgage interest (6,750*180/188) 6462.77 Property taxes (4,250*180/188) 4069.15 Repairs & maintenance (640*180/188) 612.77 Utilities (4200*180/188) 4021.28 Depreciation (20400*180/188) 19531.91 Total expenses 37857.45 Balance—net rental income 2392.55 Total “for AGI” deductions 37857.45

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