Tom and RoseMary Own a Cabin near Stowe,Vermont How Should Tom and RoseMary Report the Rental Income and Year

Multiple Choice

Tom and RoseMary own a cabin near Stowe,Vermont.During the current year the cabin is rented for 31 days for $1,800.Tom and RoseMary used the cabin a total of 12 days during the year.After making the appropriate allocation of expenses between personal and rental use,the following rental loss was determined:
$$\begin{array} { l r } \text { Rental income } & \$ 1700 \\\text { Property taxes } & ( 150 ) \\\text { Mortgage interest } & ( 950 ) \\\text { Repairs and maintenance } & ( 400 ) \\\text { Utilities } & ( 300 ) \\\text { Depreciation } & \underline { ( 200 ) } \\\text { Rental loss } & \underline { \$ ( 300 ) }\end{array}$$
How should Tom and RoseMary report the rental income and expenses for the current year?

A) Include the $1,700 in gross income, but no deductions are allowed.
B) Report the $300 loss for AGI.
C) Only expenses up to the amount of $1,700 rental income may be deducted in the current year.
D) Report the interest ($950) and taxes ($150) as itemized deductions and the other expenses for AGI.
E) No reporting for the rental activity should be reported.