Alexandra Operates a Garage as a Sole Proprietorship

question 91

Short Answer

Alexandra operates a garage as a sole proprietorship. Alexandra also owns a half interest in a partnership that operates a gas station. This year Alexandra paid or reported the following expenses related to her garage and other property. Determine Alexandra's AGI for 2016. $$\begin{array} { | l | r | } \hline \text { Gross rental income } & \$ 25,000 \\\hline \text { Tier } 1 \text { expenses: } & \\\quad \text { Mortgage interest } = ( 100 / 365 ) \times \$ 7,500 = \$ 2,056 & \\\quad \text { Property taxes } = ( 100 / 365 ) \times \$ 3,200 = \$ 877 & \\\text { Less: total Tier } 1 \text { expenses } & \\\hline \text { Balance } & \$ 2,932 ) \\\hline \text { Tier 2 expenses: } & \\\quad \text { Insurance } = ( 100 / 160 ) \times \$ 1,000 = \$ 625 & \\\quad \text { Repairs and Maintenance } = ( 100 / 160 ) \times \$ 800 = \$ 500 & \\\quad \text { Utilities } = ( 100 / 160 ) \times \$ 1,700 = \$ 1,063 & \$ 2,188 ) \\\text { Less: total Tier } 2 \text { expenses } & \$ 19,880 \\\hline \text { Balance } & \\\hline \text { Tier } 3 \text { expenses: } \\\text { Depreciation (100/160) } \times \$ 5,700 = \$ 3,563 & \$ ( 3,563 ) \\\hline \text { Net income from rental } & \$ 16,317 \\\hline\end{array}$$

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Definitions:

Voltage Drop

Voltage drop is the reduction in electrical potential across a component or conductor in an electrical circuit as current flows through it.

RLC Series Circuit

An RLC series circuit is an electrical circuit consisting of a resistor (R), an inductor (L), and a capacitor (C) connected in series, exhibiting both resistive and reactive properties.

True Power

The actual power consumed by an electrical device in watts, calculated as the product of voltage, current, and the cosine of the phase angle between them.

Applied Voltage

The external voltage applied across a component or circuit, driving current through it according to Ohm's Law.