Published on October 20, 2015
39. David is a college professor who does some consulting work on the side. He uses 25% of his home exclusively for the consulting practice. He is single and 63 years old. His AGI (without consideration of consulting income) is $45,000. Other information follows: Income from consulting business $4,000 Consulting expenses other than home office 1,500 Total costs relating to home: Interest and taxes 6,500 Utilities 1,500 Maintenance and repairs 450 Depreciation (business part only) 1,500 43. Janet purchased her personal residence in 2000 for $250,000. In January 2009 she converted it to rental property. The fair market value at the time of conversion was $210,000. a. Determine the amount of cost recovery that can be taken in 2009: b. Determine the amount of cost recovery that could be taken in 2009 if the fair market value of the property were $350,000: Chapter 7 49. Ricardo acquired a warehouse for business purposes on August 30, 1992. The building cost $200,000. He took $133,333 of depreciation on the building, and then sold it for $350,000 on July 1, 2009. What is the amount and nature of Ricardo’s gain or loss on the sale of the warehouse? 51. In 2009, Juanita sold stock considered short-term for a gain of $875 and stock considered long-term for a loss of $2,400. She also had a $2,000 short-term loss carryover from 2008 and a $240 long-term loss carryover from 2008. What amount will be shown as a short-term gain (loss) for 2009? What amount will be shown as a long-term gain (loss) for 2009? c. Will there be a carryover to 2010? If so, what is the nature and amount of the carryover? Chapter 8 37. Matt and Marie own a vacation home at the beach. During the year, they rented the house for 42 days (6 weeks) at $890 per week and used it for personal use for 58 days. The total costs of maintaining the home are as follows: Mortgage interest $4,200 Property taxes 700 Insurance 1,200 Utilities 3,200 Repairs 1,900 Depreciation 5,500 a. What is the proper tax treatment of this information on their tax return using the Tax Court method? b. Is there an option for how to allocate the expense between personal and rental use? Explain c. What is the proper tax treatment if Matt and Marie rented the house for only 14 days? 8. Janet owns a condominium at the beach. She incurs the following expenses: Mortgage interest $1,300 Property taxes 800 Insurance 1,500 Utilities 1,800 Repairs 300 Depreciation 4,000 What the proper treatment of these expenses is as applied to the following situations? Use the Tax Court allocation method, if applicable.