Taxpayer T, a single individual, purchased real estate for $1,000,000 in Year 1 (Property P). T...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Taxpayer T, a single individual, purchased real estate for $1,000,000 in Year 1 ("Property P"). T paid $700,000 cash and borrowed $300,000 (put a mortgage loan of $300,000 on the property). The mortgage was "interest-only" and T paid $13,000 of interest and no principal on the loan each year. In Year 1 T rented the property for 216 days (for $60,000) and used it for personal use for 18 days. In Year 2, T rented the property for 48 days and used it for personal use for 12 days.On January 1 of Year 3, T moved into Property P on a full-time basis as T's personal residence. T sold Property P on January 1 of year 6 when the fair market value of the residence was $1,200,000. T received $900,000 cash and the buyer assumed the mortgage liability of $300,000. T's revenue and expenses are included in the following table: Year Rental Days Personal Days Revenue/ Depreciation Mortgage Real Estate Maintenance Rental Interest Tax 1 216 18 $60,000 $39,000 $13,000 $5,200 $13,000 2 48 12 $30,000 $25,000 $13,000 $5,200 $0 3 0 365 $0 $0 $13,000 $5,200 $0 4 0 365 $0 $0 $13,000 $5,200 $2,500 5 0 365 $0 $0 $13,000 $5,200 $0 a. Assuming T follows all rules in accordance with interpretation by the IRS, what income gain or loss does T recognize/report on T's individual income tax return, form 1040 (as a result of the property) in Year 1? In Year 2? In Year 3? b. Assuming T itemizes T's deductions, what deductions can T take on T's individual income tax return, form 1040 as a result of the property in Year 1? In Year 4? c. What gain or loss, if any, on the sale of Property P, in Year 6, will be included in T's Adjusted Gross Income? Taxpayer T, a single individual, purchased real estate for $1,000,000 in Year 1 ("Property P"). T paid $700,000 cash and borrowed $300,000 (put a mortgage loan of $300,000 on the property). The mortgage was "interest-only" and T paid $13,000 of interest and no principal on the loan each year. In Year 1 T rented the property for 216 days (for $60,000) and used it for personal use for 18 days. In Year 2, T rented the property for 48 days and used it for personal use for 12 days.On January 1 of Year 3, T moved into Property P on a full-time basis as T's personal residence. T sold Property P on January 1 of year 6 when the fair market value of the residence was $1,200,000. T received $900,000 cash and the buyer assumed the mortgage liability of $300,000. T's revenue and expenses are included in the following table: Year Rental Days Personal Days Revenue/ Depreciation Mortgage Real Estate Maintenance Rental Interest Tax 1 216 18 $60,000 $39,000 $13,000 $5,200 $13,000 2 48 12 $30,000 $25,000 $13,000 $5,200 $0 3 0 365 $0 $0 $13,000 $5,200 $0 4 0 365 $0 $0 $13,000 $5,200 $2,500 5 0 365 $0 $0 $13,000 $5,200 $0 a. Assuming T follows all rules in accordance with interpretation by the IRS, what income gain or loss does T recognize/report on T's individual income tax return, form 1040 (as a result of the property) in Year 1? In Year 2? In Year 3? b. Assuming T itemizes T's deductions, what deductions can T take on T's individual income tax return, form 1040 as a result of the property in Year 1? In Year 4? c. What gain or loss, if any, on the sale of Property P, in Year 6, will be included in T's Adjusted Gross Income?
Expert Answer:
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-1119368458
7th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
Posted Date:
Students also viewed these accounting questions
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
This assignment requires you to complete the 2022 tax reporting for a fictional woman named Anna Smith. Question 1 T1 - step 4 - line 66 This is Anna's taxable income Answer: Question 2 T1 - step...
-
Use a computer and generate 50 random samples, each of size n = 28, from a normal probability distribution with = 19 and = 4. a. Calculate the z corresponding to each sample mean that would result...
-
Reformulate Exercise 11.2.33 for a mass-spring chain connected to both top and bottom supports. Do the same conclusions hold?
-
In Exercises use integration to find a general solution of the differential equation. dy dx x 2 X
-
Consider the following cash flow profile and assume MARR is 10 percent/year. a. What does Descartes' rule of signs tell us about the IRR(s) of this project? b. What does Norstrom's criterion tell us...
-
The Molokai Nut Company (MNC) makes four different products from macadamia nuts grown in the Hawaiian Islands: chocolate-coated whole nuts (Whole), chocolate-coated nut clusters (Cluster),...
-
Map the EER model of the following databases, to a relational model. Show all integrity types(Clarify your answer by underline the Primary key, and dotted line the Foreign Key. ( Member SSN {PK}...
-
Take a good look at engine fuel consumption map. Explain the various different features of the graph/figure. Add a curve corresponding to 30 km/h per 1000 rpm to the existing figure and spot...
-
When conducting the nightly audit, what is the formula for net outstanding balance? A. Previous balance + Credits - Debits B. Previous balance + Debits - Credits C. Credits - Debits + Previous...
-
6. What did Brad Wurfel say about Marc Edwards after Edwards' findings were published? Chapter 11 1. How might lead have contributed to the fall of the Roman Empire?- The Romans used lead to
-
Step 1: QFT Organizer Question Focus: Video games are harmful influences in young people's lives. Ask as many questions as you can Do not stop to answer, judge or the questions Change any statement...
-
3. Which section of the Educators Guide to the MTOP refers to using theories of child development, in order to analyse information and plan accordingly? Note the page numbers of this section.
-
By analyzing the history of education and educational trends, special education tea hypothesize reforms intended to benefit the future of special education. From the following list, select two...
-
Jillian Corporation has a $375 petty cash fund. At the end of each month, Jillian's petty cash custodian presents the records of the petty cash transactions. On August 31, there was $33 cash...
-
A simple random sample of 220 university students were asked what pasta they usually order and with which sauce. The preferences of these respondents are summarised below: Sauce Bolognese Pasta...
-
See Table 2.5 showing financial statement data and stock price data for Mydeco Corp. Was Mydeco able to improve its ROIC in 2023 relative to what it was in 2019? TABLE 2.5 2019-2023 Financial...
-
You have an investment opportunity in Japan. It requires an investment of \($0.98\) million today and will produce a cash flow of 107 million in one year with no risk. Suppose the risk-free interest...
-
Motor Company is considering offering a \($1,600\) rebate on its minivan, lowering the vehicles price from \($29,000\) to \($27,400.\) The marketing group estimates that this rebate will increase...
Study smarter with the SolutionInn App