An investor purchases an office building on January 1, 1987 for $250,000, land included. The...
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An investor purchases an office building on January 1, 1987 for $250,000, land included. The land comprises 20% of the total investment. The building has a net rentable area of 2,000 square feet. It rents for $12.00 per square foot per year. Operating expenses are estimated at 25% of gross possible income. This includes vacancy and bad debt plus operating expenses. The depreciation recovery period in 1987 was 31.5 years. The property is purchased with a 90% of loan to value ratio, 25-year term, 12% interest mortgage monthly payments. The investor is in the 28% marginal tax bracket and has no other sources of passive income. The investor is classified as a passive investor by the IRS and did not participate in the property management. What is taxable income (loss) in year one?
($16,728)
($13,268)
($11,526)
($15,267)
($13,205)
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