Chapter 3 Homework

1. Dick owns a house that he rents to college students. Dick receives $750 per month rent and incurs the following expenses during the year:
Real estate taxes $ 1,250
Mortgage interest 1,500
Insurance 375
Repairs 562
Dick purchased the house in 1980 for $48,000, excluding land costs, and depreciates it on a straight-line basis with no salvage value and a useful life of 30 years. Calculate Dick’s net rental income for the year, assuming the house was rented for a full 12 months.
4. Clifford Johnson has a limited partnership investment and a rental condominium. Clifford actively manages the rental condominium. During 2009, his share of the loss from the limited partnership was $12,000, and his loss from the rental condo was $16,000. Assuming Clifford’s modified adjusted gross income is $120,000 for 2009; complete Form 8582 on page 3-41.
11. Carl has had a couple of good years in his new business. However, in the current year he has a net operating loss of $80,000. He does not feel that the future of his business is very bright. As his tax accountant, how would you recommend Carl treat his net operating loss?
8, 28 years old and a single taxpayer, has a salary of $23,000 and rental income of $33,000 for the 2009 calendar tax year. Karen is covered by a pension through her employer.
a. What is the maximum amount that Karen may deduct for contributions to her IRA for 2009?
b. If Karen is a calendar year taxpayer and files her tax return on August 15, what is the last date on which she can make her contribution to the IRA and deduct it for 2009?
c. 21. During 2009, Jerry is a self-employed therapist, and his net earned income is $160,000 from his practice. Jerry’s Keogh plan, a defined contribution plan, states that he will contribute the maximum amount allowable. Calculate Jerry’s contribution.
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Chapter 3 Homework

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