Determine Clarence taxable income or loss

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Questions -

Q1. In 2021, Clarence purchased a vacation home at Big Sky. Clarence and his family used the home for a total of 20 days and rented it out for a total of 100 days during the year. Clarence reported the following items related to the property for 2021:

Rents received $25,000

Property taxes $6,000

Mortgage interest 9,000

Insurance 3,000

Utilities 3,000

Depreciation 12,000

Required - Determine Clarence's taxable income or loss related to this property.

Q2. Tom and Margo, who are married with modified AGI of $172,000, are sending their son to his first year of college. Their total tuition and related payments for the Fall 2021 semester amounted to $8,500. They have not taken advantage of any other type of tax benefit related to educational expenses.

Required - Calculate the amount of the American Opportunity Tax Credit available to the couple for 2021.

Reference no: EM133075504

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