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During 2015, Bertha incurred the following costs associated with her beachfront condominium in Myrtle Beach: Insurance $ 800 Repairs & maintenance 600 Mortgage interest 3,500 Property taxes 1,500 Utilities 900 Bertha could also have deducted a total of $13,000 in depreciation if the property had been acquired and used only for investment purposes. However, during the year, Bertha used the condominium 28 days for a much needed vacation. She rented it out for 90 days during the year, which resulted in total gross income of $10,000. Bertha elected to use Tax Court (Bolton rule) method for allocating mortgage interest and property taxes to rental income. (a) What total deduction amount (i) for AGI and (ii) from AGI may Bertha claim for the above condominium costs during 2015? Explain. (b) What is the effect of the above costs on Bertha’s basis in her condominium?

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Financial Accounting, Accounting

Category:- Financial Accounting
Reference No.:- M92022809

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