Need Help Solving Line $5$ of $2023$ Schedule $1$

Rental real estate, royalties, partnerships, S corporations, trusts, etc. Attach Schedule E $.($we did not complete a schedule E for this assignment$)$

Step $1$: Rental Income and Expenses $($Schedule E$)$

Rental Income $($Line $3$a$)$:

Previous lease: $$1,1502=$ $$2,300$

New lease: $$1,30010=$ $$13,000$

Adjusted May rent: $$900$

Prepaid February rent: $$1,300$

Total Rental Income:

$2,300+13,000+900+1,300=17,5002,300+13,000+900+1,300=17,500$

Step $2$: Recheck Expenses

Expenses provided are:

Insurance: $$800$

Interest Expense: $$2,800$

Property Taxes: $$1,500$

Miscellaneous Expenses: $$500$

Total Non$-$Depreciation Expenses:

$800+2,800+1,500+500=5,600800+2,800+1,500+500=5,600$

Step $3$: Recalculate Depreciation

Building Depreciation:

Cost $=$ $$95,000$Depreciated over $27\mathrm{.}5$ years:$95,00027\mathrm{.}5=3,455($annual$$depreciation$)95,00027\mathrm{.}5=3,455($annual$$depreciation$)$

Fixtures Depreciation:

Installed May $12,2023$; cost $=$ $$5,500.$Depreciated using MACRS $(7-$year recovery period, half$-$year convention$)$:$5,50014\mathrm{.}29\%=7865,50014\mathrm{.}29\%=786$

Total Depreciation:

$3,455+786=4,2413,455+786=4,241$

Step $4$: Adjust Net Rental Income

Net$$Rental$$Income$=$Total$$Rental$$Income$($Total$$Expenses$+$Depreciation$)$Net$$Rental$$Income$=$Total$$Rental$$Income$($Total$$Expenses$+$Depreciation$)$

Total Rental Income: $$17,500$

Total Expenses $($including depreciation$)$:$5,600+4,241=9,8415,600+4,241=9,841$

Net Rental Income:

$17,5009,841=7,65917,5009,841=7,659$

$7659$ is not the correct answer. Below is the scenario

$8.$ Noah and Joan own a condo and use it as a rental property. The condo is located at $16$ Oakwood Ave, Unit A$,$ Dayton, OH $45409.$ Noah provides the management services for the rental including selection of tenants, maintenance, repairs, rent collection, and other services as needed. On average, Noah spends about two hours per week on the rental activity. The revenue and expenses for the year are as follows:

Rental income received$$16,200$Insurance$800$Interest expense$2,800$Property taxes$1,500$Miscellaneous expenses$500$

Rental income includes $$1,150$ per month for two months under the previous lease $($which ended February $28,2023).$ The new lease is $$1,300$ per month for ten months under the new lease but the tenant paid only $$900$ in May $2023$ because the tenant paid $$400$ for repairs to the apartment, and with the Arc$$s permission, reduced May$$s rent by $$400.$ The new lease also required the tenant to pay last month$$s $$1,300$ rent in February $2023.$ The home was acquired for $$95,000$ in $2007.$ On May $12,2023,$ the Arcs installed new fixtures $(7-$year recovery period$)$ at a cost of $$5,500.$ They wish to maximize the cost recovery on the new fixtures but make no elections.