Cumulative problem
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Chapter 4: Additional Income and the Qualified Business Income Deduction Group 5: Cumulative Software Problem Book Title: Income Tax Fundamentals, 2019 Edition Printed By: Ahmed Almadan ([email protected]) © 2019 Cengage Learning, Cengage Learning
Chapter Review
Group 5: Cumulative Software Problem
1. The following additional information is available for the Albert and Allison Gaytor family.
The Gaytors own a rental beach house in Hawaii. The beach house was rented for the full year during 2018 and was not used by the Gaytors during the year. The Gaytors were active participants in the management of the rental house. Pertinent information about the rental house is as follows:
Address: 1237 Pineapple St., Lihue, HI 96766
Gross rental income $20,000
Mortgage interest 7,850
Real estate taxes 2,250
Utilities 2,100
Maintenance 2,400
The house is fully depreciated so there is no depreciation expense.
Albert sold the following securities during the year and received a Form 1099-B that showed the following information:
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Security Description Date Acquired Date Sold
Selling Price
Adjusted Basis
Orange, Inc. 100 Shares Common
02/11/00 04/16/18 $?3,050 $?2,150
Banana, Inc. 100 Shares Common
07/17/04 07/31/18 2,000 4,200
Grape, Corp. 100 Shares Preferred
12/08/17 09/25/18 9,000 10,500
Plum, Inc. 5 Bonds due 4/2018
12/30/08 01/02/18 5,200 5,400
Peach Mutual Fund
5,010.150 Shares
05/30/09 10/22/18 60,100 56,000
The selling price given is net of sales commissions and the basis was reported to the IRS for all sales. In addition to the above amounts, the Grapefruit mutual fund distributed a long-term capital gain of $450 on December 30, 2018.
On January 12, 2018, Albert and Allison sold their personal residence for $715,150 and purchased a new house for $725,000. This was their personal residence before and after the divorce (they have lived in it together for three years since remarrying). The old house cost $120,000 back in January of 2006 and they added on a new bedroom and bathroom a few years ago for a cost of $20,000. They also built a pool for a cost of $60,000. They moved into the new house on January 19, 2018.
Required: Combine this new information about the Gaytor family with the information from Chapters 1–3 and complete a revised 2018 tax return for Albert and Allison. Be sure to save your data input files since this case will be expanded with more tax information in later chapters.
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Student Name
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Class/Section
Date
Chapter 4: Additional Income and the Qualified Business Income Deduction Group 5: Cumulative Software Problem Book Title: Income Tax Fundamentals, 2019 Edition Printed By: Ahmed Almadan ([email protected]) © 2019 Cengage Learning, Cengage Learning
© 2019 Cengage Learning Inc. All rights reserved. No part of this work may by reproduced or used in any form or by any means - graphic, electronic, or mechanical, or in any other manner - without the written permission of the copyright holder.
