The Great Gasby know for his elaborate parties. His main business is real estate

Question

The Great Gasby know for his elaborate parties.  His main business is real estate.  He rents out two difference warehouses during the year with the following income and expenses.  Warehouse 1 - Rent $100,000, expenses Interest $25,000, Real Estate Taxes $10,000, Repair and Maintenance $12,000, Travel $2,000 and Meals and Entertainment $5,000. He paid $400,000 for the warehouse in 2013. In addition, he put in new computers during 2015 with a cost of $50,000. The second warehouse he rented for $1,000,000.  His expenses are as follows Interest $100,000, Real Estate Taxes $125,000, Repair and Maintenance $130,000, Travel $15,000, Meals and Entertainment $25,000 and Insurance on both properties $180,000.  He paid $2,500,000 for the building in 2012.  In the current year, he replaced the roof for $400,000 and redid the parking lot (Land Improvement) for $250,000. In addition to his rentals he collected $15,000 in interest from the County of Endora Bonds, $10,000 for CDs at US Bank.  He also collected a paycheck from Billy, Bubby and Bubbly Law Firm for $250,000. He paid $60,000 of mortgage interest on his house, his loan was for $1,300,000.  Real estate taxes on the house of $30,000. He paid $75,000 in medical expenses and gave a painting worth $150,000 to charity.  he only paid $20,000 for the painting.   Please compute his taxable income and taxes due.  He paid in $100,000 and had $50,000 withheld from his paycheck for federal taxes.

Explanation / Answer

warehouse 1 warehouse 2

rent 100000 1000000

-taxes 10000 125000

net annual value 90000 875000

-standard deduction 30% 27000 262500

63000 612500

-interest 60000

taxable income 63000 552500

expense interest 25000

r

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