During the current year, Kiera incurs the following expenses with respect to her

Question

During the current year, Kiera incurs the following expenses with respect to her beachfront condominium in Hawai (Click the icon to view the data.) In addition to the expenses listed above, Kiera could have deducted a total of $8,600 depreciation if the property had been acquired only for investment purposes. During the year, Kiera uses the condominium 40 days for vacation. She also rents it out for a total of 160 days during the year, generating a total gross income of $10,000 Read the requirements Requirement a. What is the total amount of deductions for and from AGI that Kiera may take during the current year with respect to the condominium using the IRS allocation method? (For purposes of this problem, use the allocation formula set forth by Sec. 280A. Enter "0 for zero amounts.) tem For AGI From AGI Insurance Repairs and maintenance Interest on mortgage Property taxes Utilities Depreciation Total deductions Requirements a. What is the total amount of deductions for and from AGI that Kiera may take during the current year with respect to the condominium using the IRS allocation method? b. What is the effect on the basis of the condominium? Print Done

Explanation / Answer

Insurance: for AGI: (160/200 * $520) = $416 Repairs and maintenance: for AGI: (160/200 * $680) = $544 Interest on mortgage: for AGI: (160/200 * $2,600) = $2,080 and the balance of $520 is deductible from AGI as an itemized deduction Property taxes: for AGI: (160/200 * $800) = $640 and the balance of $160 is deductible from AGI as an itemized deduction Utilities: for AGI: (160/200 * $1800) = $1,440 Depreciation: for AGI (160/200 * $8,600) = $6,880; however, it is limited to the remaining amount of income, $4,880, after the deductions for Insurance, Repairs and Maintenance, Interest on Mortgage, Property Taxes, and Utilities. Note: the nondeductible portion of $2,000 may be carried over to next year. Kiera can take a deduction for $10,000 for AGI and a deduction for interest and taxes in the amount fo $680. The insurances for $416, repairs and maintenance for $544 is a deductions for AGI. The basis is reduced by $4,880. Item For AGI From AGI Insurance                  416 Repairs and maintenance                  544 Interest on mortgage              2,080             520 Property taxes                  640             160 Utilities              1,440 Depreciation              4,880 Total Deductions $        10,000 $         680

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