- 5 - On December 22, 1992, petitioner wrote a check for $20,500 to her attorney, William E. Powers, which was applied to the initial deposit on the house.4 The check cleared on January 6, 1993. On March 30, 1993, the purchase of the house closed and petitioner paid $29,501 at the closing. Of this amount, $22,500 was a further downpayment on the house, and $6,977 represented closing costs paid to the mortgage lender, which included $2,500 as a prepayment of interest, referred to as "points", on the mortgage. During 1993, petitioner spent $5,893 on property improvements to the house. Beginning in May 1993, petitioner rented one-half of the house to a tenant. Petitioner reported rent income and expenses on the Schedule E of her 1993 return as follows: Rents received $5,600 Expenses Insurance 996 Mortgage interest 6,600 Repairs 4,000 Supplies 3,407 Taxes 2,128 Other (water, sewer, gas) 1,681 Depreciation expense 3,588 Total expenses 22,400 Income (loss) (16,800) 50 percent correction only � of residence rented (8,400) Petitioner reported expenses paid for the entire house, even though she only rented one-half of it to a tenant. To 4 The record does not disclose the source of the additional $2,000 paid as an initial deposit.Page: Previous 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Next
Last modified: May 25, 2011