Exam 8: Rental Property, royalties, and Income From Flow-Through Entities Line 17, form 1040, and Schedule E

May owns a four-plex in Garden Grove,CA.She rents out 3 units and lives in the fourth.Her income and expenses for the entire four-plex are as follows: mortgage interest $8,200,property taxes $9,000,insurance $3,000,utilities $2,000,repairs and maintenance $1,000,depreciation on the entire complex of $5,000,and rental income of $25,000.What amount of net rental income or loss should May report on her current tax return?

Charles and Sarah own a home in Palm Springs,CA.During the year,they rented the house for 40 days for $5,000 and used it for personal use for 18 days.The house remained vacant for the remainder of the year.The expenses for the house included $16,000 in mortgage interest,$4,500 in property taxes,$1,000 in utilities,$1,200 in maintenance,and $9,800 in depreciation.What is the deductible loss for the rental of their home without considering the passive loss limitation)? Use the Tax Court method for allocation of expenses.

A primarily rental property may report its income and expenses on a Schedule E.

Roger,Ellen,Drew and Cindy are equal partners in a local pub.The pub reports the following items for the current year: Each partner receives a Schedule K-1 with one-fourth of the preceding items reported to him/her.How must each individual report these results on his/her Form 1040?

Elizabeth rented her personal residence for 12 days to summer vacationers for $4,800.Rest of the year,she and her family used the home as their personal residence.She has AGI of $105,000,excluding the rental income.Related expenses for Elizabeth's personal residence for the year include the following: What is Elizabeth's AGI after taking into consideration the rental income and related expenses for her home?

Lois and Benjamin own a chalet in New Mexico and rented it for 12 days for $6,000.The rest of the year,the chalet was used by them and their friends and family.What is the proper tax treatment of the $6,000 income?

Flow-through entities are named as such because they are taxed continuously.

Royalties can be earned from allowing others the right to use:

If a taxpayer materially participates in his/her rental activity as a real estate professional,the activity is considered a trade or business and not a passive activity.

Jacqueline owns a condominium on an island in Washington that was rented out all year for $30,000.She incurred the following expenses: What amount of net income or loss does Jacqueline report from this rental property?

Royalties cannot be earned from which of the following:

Which of the following statements is not true about vacation home properties?

Brad and Kate received $9,500 for rent from Mike and Janet,who are renting their home in Santa Ana,California.Brad and Kate did not use this property for personal use.The rent covers eight months from August 1 of the current year to March 31 of the following year.The amount also includes a security deposit of $1,500.How much should Brad and Kate report as rental income in the current tax year?

What must the owner of rental property do with respect to the rental activity to have it be considered: 1)material participation? 2)a trade or business?

Leslie and Devin own a beach cottage that they rented 30 days for $4,500.They used the cottage for personal use for 45 days during the year.The allocated expenses related to the cottage total $6,000,resulting in a net loss of $1,500 for this rental activity.What is the proper tax treatment of these amounts by Leslie and Devin?

The two methods that may be used to allocate expenses between personal and rental use of properties are the IRS method and the Tax Court method.

The income from a partnership to its partner is considered self-employment income.

What are the different types of income that may be reported on Schedule E?

Colin and Megan own a cabin in the Mammoth Mountains,California.During the year,they rented it for 45 days for $10,000 and used it 12 days for personal use.The expenses for the cabin included $7,000 in mortgage interest,$3,000 in property taxes,$1,200 in utilities,$400 in maintenance,and $3,000 in depreciation.What is their net income or loss from the cabin without considering the passive loss limitation)? Use the IRS method for allocation of expenses.Round your answer to the nearest whole number.)