Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses...

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Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses...

Natalie owns a condominium near Cocoa Beach in Florida. This year, she incurs the following expenses in connection with her condo:


Insurance	$	1,050
Advertising expense		965
Mortgage interest		5,800
Property taxes		1,080
Repairs & maintenance		1,130
Utilities		550
Depreciation		8,700

During the year, Natalie rented out the condo for 94 days, receiving $22,500 of gross income. She personally used the condo for 50 days during her vacation.

Assume Natalie uses the Tax Court method of allocating expenses to rental use of the property. Assume 365 days in the current year. (Do not round intermediate calculations. Round your final answers to the nearest whole dollar amount.)

d. Assume that gross rental revenue was $4,500 (rather than $22,500). What amount of for AGI deductions may Natalie deduct in the current year related to the condo?

Note: Tier 1 expenses alone are not correct

business accounting

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Answer 1

Answer #1

Tier 1 expenses shall be deducted as AGI deductions. Tier 1 expenses include advertising expenses, mortgages interest and property taxes among others. Tier 1 expenses are calculated below :

Tier 1 expenses
Advertising expense	965
Mortgage Interest (5,800*94/365)	1493.698
Property taxes (1,080*94/365)	278.136	$ 2737

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Answer 2

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