Exercise 11-31 (Algorithmic) (LO. 8)

Noah Yobs, age 55, who has $81,400 of AGI (solely from wages) before considering rental activities, has $73,260 of losses from a real estate rental activity in which he actively participates. He also actively participates in another real estate rental activity from which he has $40,700 of income. He has other passive activity income of $26,048.

a. What amount of rental loss can Noah use to offset active or portfolio income in the current year? $________.

b. Compute Noah's AGI on Form 1040 [page 1; also complete Schedule 1 (Form 1040)] for the current year. Use the minus sign to indicate a loss.

Form 1040

Department of the TreasuryInternal Revenue Service (99) U.S. Individual Income Tax Return

2021

OMB No. 1545-0074

IRS Use Only

Filing Status SingleMarried filing jointlyMarried filing separately (MFS)Head of household (with qualifying person) (HOH)Qualifying widow(er) (QW)Single
Your first name and middle initial Noah	Last name Yobs	Your social security number 123-45-6789
If joint return, spouse's first name and middle initial	Last name	Spouse's social security number
Home address (number and street). If you have a P.O. box, see instructions.	Apt. no.	Presidential Election Campaign Doyou, or your spouse if filing jointly, want $3 to go to this fund. Selecting an option below will not change your tax or refund. YesNoNo
City, town, or post office. If you have a foreign address, also complete spaces below.	State	ZIP code
Foreign country name	Foreign province/state/county	Foreign postal code

At any time during 2021, did you receive, sell, exchange, or otherwise dispose of any financial interest in any virtual currency?

YesNoYes

Standard Deduction	Someone can claim: You as a dependentYour spouse as a dependentSpouse itemizes on a separate return or you were a dual-status alienNone
Age/Blindness	You: Were born before January 2, 1957Are blindWere born before January 2, 1957, Are blindNone Spouse: Was born before January 2, 1957Is blindWas born before January 2, 1957, Is blindNone

Dependents If more than four dependents, see instructions and check here	(see instructions):	(2) Social security number	(3) Relationship to you	(4) if qualifies for (see instructions):
(1) First name	Last name	Child tax credit	Credit for other dependents

Attach Sch. B if required.	1	Wages, salaries, tips, etc. Attach Form(s) W-2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1	fill in the blank 02fc3bfdbfaa016_7
2a	Tax-exempt interest . .	2a		b	Taxable interest . . . . . . . . . .	2b
3a	Qualified dividends . . .	3a		b	Ordinary dividends . . . . . . . .	3b
4a	IRA distributions . . . . .	4a		b	Taxable amount . . . . . . . . . .	4b
	5a	Pensions and annuities	5a		b	Taxable amount . . . . . . . . . .	5b
Standard Deduction for- Single or Married filing separately, $12,550 Married filing jointly or Qualifying widow(er), $25,100 Head of household, $18,800 If checked any box under Standard Deduction, see instructions.	6a	Social security benefits	6a		b	Taxable amount . . . . . . . . . .	6b
7	Capital gain or (loss). Attach Schedule D if required. If not required, check here . . .	7
8	Other income from Schedule 1, line 10 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8	fill in the blank 02fc3bfdbfaa016_8
9	Add lines 1, 2b, 3b, 4b, 5b, 6b, 7, and 8. This is your total income . . . . . . . . . . . . .	9	fill in the blank 02fc3bfdbfaa016_9
10	Adjustments to income from Schedule 1, line 26 . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
11	Subtract line 10 from line 9. This is your adjusted gross income . . . . . . . . . . . . . .	11	fill in the blank 02fc3bfdbfaa016_10
12a	Standard deduction or itemized deductions (from Schedule A) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12a
b	Charitable contributions if you take the standard deduction (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12b
c	Add lines 12a and 12b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12c
13	Qualified business income deduction from Form 8995 or Form 8995-A . . . . . . . . . . . . .	13
14	Add lines 12c and 13 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
15	Taxable income. Subtract line 14 from line 11. If zero or less, enter -0- . . . . . . . . . . . .	15

For Disclosure, Privacy Act, and Paperwork Reduction Act Notice, see separate instructions.

Cat. No. 11320B

Form 1040 (2021)

SCHEDULE 1 (Form 1040) Department of the Treasury Internal Revenue Service	Additional Income and Adjustments to Income Attach to Form 1040, 1040-SR, or 1040-NR. Go to www.irs.gov/Form1040 for instructions and the latest information.	OMB No. 1545-0074
2021 Attachment Sequence No. 01

Name(s) shown on Form 1040, 1040-SR, or 1040-NR Noah Yobs

Your social security number 123-45-6789

Part I

Additional Income

1	Taxable refunds, credits, or offsets of state and local income taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
2a	Alimony received . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2a
b	Date of original divorce or separation agreement (see instructions)
3	Business income or (loss). Attach Schedule C . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
4	Other gains or (losses). Attach Form 4797 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
5	Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E . . . . . . . . . . . . . . .	5	fill in the blank 02fc3bfdbfaa016_11
6	Farm income or (loss). Attach Schedule F . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
7	Unemployment compensation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
8	Other income:
a	Net operating loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8a	()
b	Gambling income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8b
c	Cancellation of debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8c
d	Foreign earned income exclusion from Form 2555 . . . . . . . . . . . . . . . . . . . . . . .	8d	()
e	Taxable Health Savings Account distribution . . . . . . . . . . . . . . . . . . . . . . . . . . .	8e
f	Alaska Permanent Fund dividends . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8f
g	Jury duty pay . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8g
h	Prizes and awards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8h
i	Activity not engaged in for profit income . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8i
j	Stock options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8j
k	Income from the rental of personal property if you engaged in the rental for profit but were not in the business of renting such property . . . . . . . . . . . . . . . . . . . . .	8k
l	Olympic and Paralympic medals and USOC prize money (see instructions) . . . . . .	8l
m	Section 951(a) inclusion (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8m
n	Section 951A(a) inclusion (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . .	8n
o	Section 461(l) excess business loss adjustment . . . . . . . . . . . . . . . . . . . . . . . . .	8o
p	Taxable distributions from an ABLE account (see instructions) . . . . . . . . . . . . . . .	8p
z	Other income. List type and amount
		8z
9	Total other income. Add lines 8a through 8z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
10	Combine lines 1 through 7 and 9. Enter here and on Form 1040, 1040-SR, or 1040-NR, line 8 . . . . . . . . . . .	10	fill in the blank 02fc3bfdbfaa016_12

For Paperwork Reduction Act Notice, see your tax return instructions.

Cat. No. 71479F

Schedule 1 (Form 1040) 2021

Schedule 1 (Form 1040) 2021

Page 2

Part II

Adjustments to Income

11	Educator expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
12	Certain business expenses of reservists, performing artists, and fee-basis government officials. Attach Form 2106 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
13	Health savings account deduction. Attach Form 8889 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
14	Moving expenses for members of the Armed Forces. Attach Form 3903 . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
15	Deductible part of self-employment tax. Attach Schedule SE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	15
16	Self-employed SEP, SIMPLE, and qualified plans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	16
17	Self-employed health insurance deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	17
18	Penalty on early withdrawal of savings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
19a	Alimony paid . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19a
b	Recipient's SSN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
c	Date of original divorce or separation agreement (see instructions) . . . . . . . .
20	IRA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
21	Student loan interest deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
22	Reserved for future use . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	22
23	Archer MSA deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	23
24	Other adjustments:
a	Jury duty pay (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24a
b	Deductible expenses related to income reported on line 8k from the rental of personal property engaged in for profit . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24b
c	Nontaxable amount of the value of Olympic and Paralympic medals and USOC prize money reported on line 8l . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24c
d	Reforestation amortization and expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24d
e	Repayment of supplemental unemployment benefits under the Trade Act of 1974 . .	24e
f	Contributions to section 501(c)(18)(D) pension plans . . . . . . . . . . . . . . . . . . . . . .	24f
g	Contributions by certain chaplains to section 403(b) plans . . . . . . . . . . . . . . . . . .	24g
h	Attorney fees and court costs for actions involving certain unlawful discrimination claims (see instructions) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24h
i	Attorney fees and court costs you paid in connection with an award from the IRS for information you provided that helped the IRS detect tax law violations . . . . . . . . .	24i
j	Housing deduction from Form 2555 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	24j
k	Excess deductions of section 67(e) expenses from Schedule K-1 (Form 1041) . . . . .	24k
z	Other adjustments. List type and amount
		24z
25	Total other adjustments. Add lines 24a through 24z . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	25
26	Add lines 11 through 23 and 25. These are your adjustments to income. Enter here and on Form 1040 or 1040-SR, line 10, or Form 1040-NR, line 10a . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Schedule 1 (Form 1040) 2021