Exam 8: Rental Property, Royalties, Income From Flow-Through Entities

Reggie and Bebe own an apartment building in Portland, Oregon, with 8 identical units. They live in one and rent the remaining units. Their rental income for the year was $45,000. They incurred the following expenses for the entire building: What amount of net income should Reggie and Bebe report for the current year for this rental? (Round your answer to the nearest whole dollar)

A taxpayer may use a Schedule C or a Schedule E to report royalty income.

Residential rental properties are depreciated using the straight-line method over 27½ years.

In the case of personal/rental property, a taxpayer can deduct expenses only to the extent that there is rental income.

On June 1^st of the current year, Nancy and Dean purchased a rental beach house for $1,200,000. Of that amount, $800,000 was for the land value. How much depreciation deduction can Nancy and Dean take in the current year? (You may need to refer to the depreciation tables.)

What is the proper tax treatment of capital improvements for a residential or commercial rental property?

Which of the following expense items is(are) deductible as rental expense?

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?

In the current year, Marnie rented her vacation home for 75 days, used it for personal reasons for 22 days, and left it vacant for the remainder of the year. Her income and expenses are as follows: What is Marnie's net income or loss from the activity? Use the Tax Court method. (Round your answer to the nearest whole dollar)

When royalties are paid, at the end of the year the payer sends the recipient a Form ______?

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.

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)

What criteria determine a personal and rental use property as personal/rental? How is net income or loss treated for tax purposes for a personal/rental property?

A property that has been rented for 180 days and used for personal use for 16 days should be categorized as:

Meredith has a vacation rental house in the Sierra Mountains. During the year, she and her immediate family used the house for 12 days for a personal vacation. Meredith spent two more weekends (4 days in total) repairing the deck. The house was rented for 120 days. How should the cabin be categorized this year for tax purposes? Explain your answer.

Which of the following statements is incorrect concerning rental properties?

Samantha is a full-time author and recently published her 8^th romance novel. She should report the royalty income she receives from the publisher this year on what Schedule/Form?

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

Which of the following is not considered a capital improvement for a rental activity?

Lupe rented her personal residence for 13 days to summer vacationers for $3,800. She lived in the home for the rest of the year. She has AGI of $95,000 excluding the rental income. Related expenses for Lupe's personal residence for the year include these: What is Lupe's AGI after taking into consideration the rental income and related expenses?