Rick and Debbie Siravo own a beachfront home in Wrightsville Beach, N.C. During the year, they rent it for 20 weeks (140 days) at $1,100 per week and use it 10 days for personal purposes. Rick actively participates in the management of the property, but does not qualify as a real estate professional. Their adjusted gross income for the year is $137,200 and the costs of maintaining the home for the year are:
Mortgage interest .......... $15,500
Real property taxes ........... 4,500
Management fee ........... 1,085
Insurance .............. 1,200
Utilities .............. 2,200
Cleaning service (only for rental period) . 1,500
Repairs and maintenance ........ 700
Depreciation (unallocated) ....... 8,500

Complete Form 1040 Schedule E and Form 8582 using the above information. Rick’s Social Security number is 036-87-1458, Debbie’s Social Security number is 035-11- 4856, and the address of the home is 435 Beachway Lane, Wrightsville Beach, NC 28480. Forms and instructions can be downloaded from the IRS Web site (www.irs.gov/formspubs/index.html).