Lyle and Kaye James are married, have two minor children, Jessica, age 8 and Jerron, age 4, and are filing a joint tax return in the current year. They are both employed. Lyle and Kaye, ages 38 and 37, respectively, have combined salaries of $240,000, from which $48,000 of federal income tax and $10,000 of state income tax are withheld. Lyle and Kaye own two homes. Their primary residence is located at 11620 N. Mount Ave., New Haven, Connecticut 22222, and their vacation home is on the beach in Fort Lauderdale, Florida. They often rent their vacation home to supplement their income. The following items are related to the James? ownership of the two homes:

The James family used their Fort Lauderdale home 20 days during the year. They rented the vacation home 60 days during the year. Lyle and Kaye jointly purchase stock in various corporations and make the following transactions in the current year. (None of the stock qualifies as small business stock.)

The James? have no other income or expense items. Lyle and Kaye?s Social Security numbers are 111-22-3333 and 444-55-6666, respectively. Jessica and Jerron?s Social Security numbers are 123-45-6789 and 888-99-1010. The James? use the IRS method of allocating all expenses between personal and rental use. File the James? income tax return Form 1040, Schedules A, D, and E using the currently available forms and rates. Disregard the alternative minimum tax and any tax credits for which they may be eligible.

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Item New Haven Fort Lauderdale Rental income Qualified residence interest Property taxes Utilities Repairs Depreciation Advertising $ - 7,200 1,400 1,000 200 $15,000 5,000 1,000 1,300 300 3,500 200 Insurance 1,500 1,500