The rental apartment building they own and actively manage, located at 1140 Farn
ID: 2493766 • Letter: T
Question
The rental apartment building they own and actively manage, located at 1140 Farnsworth Avenue in Aurora, generates the following income and expenses:
Rental income of $70,000
Rental expenses excluding depreciation as follows:
Property insurance $15,600
Repairs and maintenance $ 6,500
Property taxes $15,700
Utilities $ 9,800
The apartment building was purchased in June of 2009 for $700,000. The cost of the land was estimated at 20 % of the total value.
Furniture for the apartment building office and lobby was purchased in March of 2010 for $50,000. Section 179 and additional first year bonus depreciation were NOT claimed in 2010.
None of the above expenses require the filing of a form 1099.
___________________________________________________________________
Please use the approriate tax forms and fill in the amount on tax form 1040 from 2014
Form 1040 Schedule E (2014) and all other forms needed.
Explanation / Answer
Solution:
Rental Income = $70,000
Less Expenses
Insurance = $15,600
Repair & Maintenance = $6,500
Utilities =$9,800
Property Tax =$15,700
Depreciation =
Depreciation Calculation
Depreciation
Building
Land
Furniture
Rate
Straight line
Not Allowed
200% Declining
Useful life
27.5
-
5
Cost
560000
140000
50000
Year
2009
11878.78
0
0
2010
20363.63
0
8333.33
2011
20363.63
0
16000
2012
20363.63
0
9600
2013
20363.63
0
5760
2014
20363.63
0
5760
Depreciation
Building
Land
Furniture
Rate
Straight line
Not Allowed
200% Declining
Useful life
27.5
-
5
Cost
560000
140000
50000
Year
2009
11878.78
0
0
2010
20363.63
0
8333.33
2011
20363.63
0
16000
2012
20363.63
0
9600
2013
20363.63
0
5760
2014
20363.63
0
5760