Mike and Pam Own a Cabin near Teluride,Colorado How Should Mike and Pam Report the Rental Income and Year

Multiple Choice

Mike and Pam own a cabin near Teluride,Colorado.In the current year the cabin was rented for 8 days to friends.Mike and Pam used the cabin a total of 82 days during the same year.After allocating the expenses between personal and rental use,the following rental loss was determined:
$\begin{array}{llcc} \text { Rental income } & \$ 700\\ \text { Froperty taxes } &(250) \\ \text { Mortgage interest } &(300) \\ \text {Repairs and maintenance } &(100) \\ \text { Utilities } &\underline{(150) }\\ \text {Rental loss } & \underline{\$(100) }\\\end{array}$

How should Mike and Pam report the rental income and expenses for last year?

A) Report the $100 loss for AGI.
B) Include the $700 in gross income, but no deductions are allowed.
C) Only expenses up to the amount of $700 rental income may be deducted.
D) Report the interest ($300) and taxes ($250) as itemized deductions and the other expenses for AGI.
E) No reporting for the rental activity is necessary.