During 2020, Suki rented her vacation home for 90 days and lived in the home for 60 days. The vacationhome is classified as personal/rental use. Suki's gross rent revenue is $25,000. For the entire year, thevacation home incurred the following expenses: C6 Ex38Real estate taxesMortgage interest expenseUtilities & maintenanceDepreciation$6,200$12,000$4,500$6,500Using the IRS approach:A) Calculate and list the expenses directly attributable to Suki's rental income (for AGI).B) Calculate Suki's gain (loss) from the vacation rental activity, reportable on 1040, Schedule E.C) Calculate and list any remaining and available itemized deductions from AGI, reportable onSuki's 1040, Schedule A.

Rental Income -: Rental Income in financial Terms is simply the earning earned from a property that…

Answered: Real estate taxes Mortgage interest…

Real estate taxes Mortgage interest expense Utilities & maintenance Depreciation $6,200 $12,000 $4,500 $6,500 ES approach:

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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Concept explainers

Capital Gain

Any capital asset when sold can give the seller a higher or lower price from its purchase price leading to a capital gain or capital loss. The time period of holding an asset is decided based on if it is a long term or short-term capital gain. On that basis, the rate of taxation is decided if it is 20%, 15% or according to the tax brackets. The rate of taxation differs in the case of equity or debt, whether long or short term. The capital gain can be adjusted from capital loss to arrive at a net capital gain. The amount of gains and the exemption has to be reported in the tax return filed in the financial year in which the asset was transferred. The tax return can be filed quarterly, monthly, semi-annually or annually.

Question

During 2020, Suki rented her vacation home for 90 days and lived in the home for 60 days. The vacation
home is classified as personal/rental use. Suki's gross rent revenue is $25,000. For the entire year, the
vacation home incurred the following expenses: C6 Ex38
Real estate taxes
Mortgage interest expense
Utilities & maintenance
Depreciation
$6,200
$12,000
$4,500
$6,500
Using the IRS approach:
A) Calculate and list the expenses directly attributable to Suki's rental income (for AGI).
B) Calculate Suki's gain (loss) from the vacation rental activity, reportable on 1040, Schedule E.
C) Calculate and list any remaining and available itemized deductions from AGI, reportable on
Suki's 1040, Schedule A.

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