Chapter Review

Group 5: Cumulative Software Problem

1. The following additional information is available for the Albert and Allison Gaytor family.

   The Gaytors own a rental beach house in Hawaii. The beach house was rented for the full year during 2020 and was not used by the Gaytors during the year. The Gaytors were active participants in the management of the rental house but the activity is not eligible for a QBI deduction. Pertinent information about the rental house is as follows:

   Address: 1237 Pineapple St., Lihue, HI 96766
   Gross rental income	$20,000
   Mortgage interest	8,000
   Real estate taxes	2,200
   Utilities	1,400
   Cleaning	2,400
   Repairs	650

   The house is fully depreciated so there is no depreciation expense.

   Albert and Allison received the following combined statements 1099-DIV and 1099-B from their investment manager:

   On January 12, 2020, Albert and Allison sold their personal residence for $716,000 and purchased a new house for $725,000. This was their personal residence before and after the divorce (they have lived in it together for three years since remarrying). The old house cost $120,000 back in January of 2008 and they added on a new bedroom and bathroom a few years ago for a cost of $20,000. They also built a pool for a cost of $61,500. They moved into the new house on January 19, 2020.

   Required: Combine this new information about the Gaytor family with the information from Chapters 1, 2, and 3 and complete a revised 2020 tax return for Albert and Allison. Be sure to save your data input files since this case will be expanded with more tax information in later chapters.