Alexandra Operates a Garage as a Sole Proprietorship

Alexandra operates a garage as a sole proprietorship. Alexandra also owns a half interest in a partnership that operates a gas station. This year Alexandra paid or reported the following expenses related to her garage and other property. Determine Alexandra's AGI for 2016. $$\begin{array} { | l | r | } \hline \text { Gross rental income } & \$ 25,000 \\\hline \text { Tier } 1 \text { expenses: } & \\\quad \text { Mortgage interest } = ( 100 / 365 ) \times \$ 7,500 = \$ 2,056 & \\\quad \text { Property taxes } = ( 100 / 365 ) \times \$ 3,200 = \$ 877 & \\\text { Less: total Tier } 1 \text { expenses } & \\\hline \text { Balance } & \$ 2,932 ) \\\hline \text { Tier 2 expenses: } & \\\quad \text { Insurance } = ( 100 / 160 ) \times \$ 1,000 = \$ 625 & \\\quad \text { Repairs and Maintenance } = ( 100 / 160 ) \times \$ 800 = \$ 500 & \\\quad \text { Utilities } = ( 100 / 160 ) \times \$ 1,700 = \$ 1,063 & \$ 2,188 ) \\\text { Less: total Tier } 2 \text { expenses } & \$ 19,880 \\\hline \text { Balance } & \\\hline \text { Tier } 3 \text { expenses: } \\\text { Depreciation (100/160) } \times \$ 5,700 = \$ 3,563 & \$ ( 3,563 ) \\\hline \text { Net income from rental } & \$ 16,317 \\\hline\end{array}$$

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$76,669
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