Pat owned and occupied a residence near Hofstra University (adjusted basis of $220,000) for four years. On
Question:
Pat owned and occupied a residence near Hofstra University (adjusted basis of $220,000) for four years. On June 30 2020, the house was sold for $300,000 (selling expenses were $10,000). Property taxes for the year were paid by Pat prior to selling the property in the amount of $14,000. Pat’s tuition at Hofstra cost $30,000. He also paid tax preparation fees of $500. He also lost $200 on the sale of a beer keg he purchased in his junior year. He incurred commuting expenses to his work study in the amount of $300 including gas and oil changes.
Pat’s return reported the following:
Income: $10,000 Wages (Hofstra Work Study)
Rental Income $5,000 7 day rental for graduation week
Gross income: $15,000
Less itemized deductions $14,000
Taxable income $1,000 (assume this figure is also the tax due)
Credits: American Opportunity $2,500
(Please ignore EITC(earned income tax credit) for this problem)
Refund claimed: $1,500
In a 30 day letter the IRS adds income as follows:
Long-term Capital gain $100,000
Disallowed itemized deductions of $14,000 for Nassau County property taxes claimed
Question:
What is the gross income and taxable income?
South Western Federal Taxation 2015
ISBN: 9781305310810
38th edition
Authors: William H. Hoffman, William A. Raabe, David M. Maloney, James C. Young