Tyson owns a condominium near Laguna Beach, California. During the year, Tyson rented the condo for 100days receiving $20,000 of gross rent. He personally used the condo for 60 days. In 2020, he incurs theexpenses listed below in connection with his condo. Tyson is deducting $4,000 of state and local income taxes(this does not include any real estate property taxes he is entitled to) as itemized deductions.What is Tyson's net rental income assuming (a) he uses the Tax Court method of allocating expenses and (b) heuses the IRS method of allocating expenses. How much is his itemized deduction for real estate property taxesunder cach method.Mortgage InterestProperty taxesRepairsUtilities$9,7005,6503,2502,1603,1251,28011,560MaintenanceAdvertisingDepreciationNet rental income- IRS MethodNet Rental Income- Tax court MethodItemized deduction for Real Estate Taxes - IRS MethodItemized Deduction for Real Estate Taxes Tax court MethodShow your work for any potential partial credit.ExpenseAmountIRS MethodTax court Method

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Net rental income-IRS Method Net Rental Income- Tax court Method Itemized deduction for Real Estate Taxes IRS Method

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

Tyson owns a condominium near Laguna Beach, California. During the year, Tyson rented the condo for 100
days receiving $20,000 of gross rent. He personally used the condo for 60 days. In 2020, he incurs the
expenses listed below in connection with his condo. Tyson is deducting $4,000 of state and local income taxes
(this does not include any real estate property taxes he is entitled to) as itemized deductions.
What is Tyson's net rental income assuming (a) he uses the Tax Court method of allocating expenses and (b) he
uses the IRS method of allocating expenses. How much is his itemized deduction for real estate property taxes
under cach method.
Mortgage Interest
Property taxes
Repairs
Utilities
$9,700
5,650
3,250
2,160
3,125
1,280
11,560
Maintenance
Advertising
Depreciation
Net rental income- IRS Method
Net Rental Income- Tax court Method
Itemized deduction for Real Estate Taxes - IRS Method
Itemized Deduction for Real Estate Taxes Tax court Method
Show your work for any potential partial credit.
Expense
Amount
IRS Method
Tax court Method

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