Question

Lupe rented her personal residence for 13 days to summer vacationers for $3,800.

She lived in the home for the rest of the year. She has AGI of $95,000 excluding the rental income.

Related expenses for Lupe's personal residence for the year include these:

Real property taxes $ 4,500
Utilities 5,000
Insurance 900
Mortgage interest 7,000
Repairs 800
Depreciation 1,500

What is Lupe's AGI after taking into consideration the rental income and related expenses?

Answer 1

$95,000.

Step-by-step explanation:

Adjusted gross income(AGI) is the income that is calculated after deducting all the line deduction items that are included in form 1040. It is used to calculate the net income tax due.

The rental income earned by Lupe's on her personal residence amounting to $3,800 shall not be included for the purpose of calculating AGI and therefore all the expenses mentioned in the question regarding the Lupe's personal residence shall not be considered for calculating AGI and hence the Lupe's AGI will be $95,000.