Respuesta :
Question Completion:
Chee single, age 40, had the following income and expenses during 2019:
Income Salary $43,000
Rental of vacation home (rented 60 days, used personally 60 days, vacant 245 days) 4,000
Municipal bond interest 2,000
Dividend from General Electric 400
Expenses
Interest on home mortgage 8,400
Interest on vacation home 4,758
Interest on loan used to buy municipal bonds 3,100
Property tax on home $ 2,200
Property tax on vacation home 1,098
State income tax 3,300
State sales tax 900
Charitable contributions 1,100
Tax return preparation fee 300
Utilities and maintenance on vacation home 2,600
Depreciation on rental portion of vacation home 3,500
Answer:
Chee
a) Rental income $4,000
Less: Taxes and interest
(60/365 × $5,856);
court's approach (963)
Remainder $3,037
Less: Utilities and maintenance
(60/120 × $2,600) (1,300)
Remainder $1,737
d) Less: Depreciation
($3,500, limited to $1,737) (1,737)
Net income from
vacation home $0
b) Itemized deductions:
State income tax $3,300
Property tax on home 2,200
Interest on home mortgage 8,400
Interest and property tax on
vacation home 4,893
Charitable contributions 1,100
Tax return preparation fee 0
Total itemized deductions (19,893)
Income:
Salary $43,000
Dividend 400
Net income from vacation home 0
Adjusted gross income $43,400
b) Itemized deductions:
State income tax $3,300
Property tax on home 2,200
Interest on home mortgage 8,400
Interest and property tax on
vacation home 4,893
Charitable contributions 1,100
Tax return preparation fee 0
Total itemized deductions (19,893)
c) Taxable income $23,507
d) Depreciation ($3,500, limited to $1,737) = $1,737
Explanation:
a) Data and Calculations:
Income Salary $43,000
Rental of vacation home 4,000
Municipal bond interest 2,000
Dividend from General Electric 400
Expenses
Interest on home mortgage 8,400
Interest on vacation home 4,758
Interest on loan used
to buy municipal bonds 3,100
Property tax on home $ 2,200
Property tax on vacation home 1,098
State income tax 3,300
State sales tax 900
Charitable contributions 1,100
Tax return preparation fee 300
Utilities and maintenance
on vacation home 2,600
Depreciation on rental
portion of vacation home 3,500
Income:
Salary $43,000
Dividend 400
Net income from vacation home 0
Adjusted gross income $43,400
b) Itemized deductions:
State income tax $3,300
Property tax on home 2,200
Interest on home mortgage 8,400
Interest and property tax on
vacation home 4,893
Charitable contributions 1,100
Tax return preparation fee 0
Total itemized deductions (19,893)
Taxable income $23,507
c) The municipal bond interest of $2,000 is not taxable and is excluded from the gross income. The interest expense of $3,100 on the loan to buy municipal bonds is likewise not deductible.
d) Note that $4,893 ($5,856 total − $963 vacation home portion) of property tax and mortgage interest on the vacation home are itemized deductions.
e) The state income taxes paid ($3,300) exceed state sales taxes paid ($900).
f) Tax preparation fees are miscellaneous itemized deductions and are not deductible.
