ACC 401 Week 3 Assignment Real Estate

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ACC 401 Week 3 Assignment Real Estate

Real Estate for Home and Business. From Chapter 6, complete Problem 39 and Problem 43. From Chapter 7, complete Problem 49 and Problem 51. From Chapter 8, complete Problem 37 and Problem 38.

Chapter 6, complete Problem 39 and Problem 43

  1. David is a college professor who does some consulting work on the side. He uses 25% of his home exclusively for the consulting practice. He is single and 63 years old. His AGI (without consideration of consulting income) is $45,000. Other information follows:

Income from consulting business$4,000

Consulting expenses other than home office 1,500

Total costs relating to home:

Interest and taxes 6,500

Utilities 1,500

Maintenance and repairs 450

Depreciation (business part only) 1,500

Calculate Davids AGI.

  1. Janet purchased her personal residence in 2001 for $250,000. In January 2010 she converted it to rental property. The fair market value at the time of conversion was $210,000.

a. Determine the amount of cost recovery that can be taken in 2010:_____

b. Determine the amount of cost recovery that could be taken in 2010 if the fair market value of the property were $350,000:_____

Chapter 7, complete Problem 49 and Problem 51

  1. Ricardo acquired a warehouse for business purposes on August 30, 1992. The building cost $400,000. He took $226,900 of depreciation on the building, and then sold it for $500,000 on July 1, 2010. What are the amount and nature of Ricardos gain or loss on the sale of the warehouse?

  2. In 2010, Rosalva sold stock considered short-term for a gain of $875 and stock considered long-term for a loss of $3,400. She also had a $3,000 short-term loss carryover from 2009 and a $1,240 long-term loss carryover from 2009.

a. What amount will be shown as a short-term gain (loss) for 2010?

b. What amount will be shown as a long-term gain (loss) for 2010?

c. Will there be a carryover to 2011? If so, what are the nature and amount of the carryover?

d. Prepare a Schedule D. (Detailed stock information has been omitted; use reasonable assumptions.)

Chapter 8, complete Problem 37 and Problem 38

  1. Matt and Marie own a vacation home at the beach. During the year, they rented the house for 42 days (6 weeks) at $890 per week and used it for personal use for 58 days. The total costs of maintaining the home are as follows:

Mortgage interest$4,200

Property taxes 700

Insurance 1,200

Utilities 3,200

Repairs 1,900

Depreciation 5,500

a. What is the proper tax treatment of this information on their tax return using the Tax Court method?

b. Is there an option for how to allocate the expense between personal and rental use? Explain.

c. What is the proper tax treatment if Matt and Marie rented the house for only 14 days?

  1. Janet owns a home at the lake. She incurs the following expenses:

Mortgage interest$1,300

Property taxes 800

Insurance 1,500

Utilities 1,800

Repairs 300

Depreciation 4,000

What is the proper treatment of these expenses in each of the following cases? Use the Tax Court allocation method, if applicable.

CaseRental IncomeDays RentedPersonal Use Days

A$9,0004510

B12,0005525

C 6,0001030

D22,0003650

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