Question: PFPL530 Income Tax Planning: Using the Schedule E from the case study as a guide, calculate the net income or loss from each rental property.

• 1.     Using the Schedule E from the case study as a guide, calculate the net income or loss from each rental property. Take into account your depreciation calculations from Week 5. The renovations on Cottage St. did take place, but they decided not to pursue the furniture purchase. The rental income and expenses will remain the same, except that the mortgage interest paid for 2022 will be:

• 2.     Assume that the Andersons’ rental activities generate a net rental loss during the current year. How do the passive activity loss provisions impact the rental activities? After evaluating the Andersons’ situation, compare and contrast the two exceptions to the passive activity loss provisions that may allow for deductibility of the losses.

• 3.     Assume that the Andersons acquire the ski condo discussed in Assignment 6. Realistically, they believe they will not be able to take advantage of the ski condo for more than two to three weeks a year. They plan to rent the condo as much as possible, but they would like to be able to use the property as much as possible and still have the property treated as a rental instead of a residence. How much may they use the property and still have it treated as a rental? Be sure to provide examples to illustrate your conclusion.

• 4.     In Assignment 5, we examined the Section 1231 consequences of the sale of a rental property. Let’s continue with that example. Assume, for purposes of this question only, that the sale of the Constitution Street property occurs on December 31, 2022. Analyze the impact, if any, on the suspended passive losses from the rental activity/activities.

• 5.     John Young is the lead partner in a local accounting firm whose practice consists of tax consulting and compliance. The firm also serves clients by providing write-up and payroll processing services. As his firm has grown, John has developed various ways to build its business prospects. John and his wife, Jena, created JJ Partnership to purchase an office building where John moved his practice. Because the building is larger than the practice currently needs, space is rented to other tax practitioners. In addition to providing office space, the partnership offers professional and administrative services on an exclusive basis to the tenants. These services include secretarial support, telephone answering service, tax professionals available for special projects, access to an online tax research library, computer hardware technology, and miscellaneous administrative support. JJ Partnership considers its primary activity to be providing professional and administrative services to its tenants rather than being a lessor. Because of the attractiveness of the services offered to its tenants, the building is fully leased. In the first year, Jena works full-time at the partnership, and John commits about 550 hours to its affairs. For the first year, the partnership incurs a tax loss of $60,000. Without considering the impact of the loss, John and Jena’s AGI is $175,000. What advice would you provide on the deductibility of the $60,000 loss for federal income tax purposes?