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 c } \text { Rental income } & \$ 1700 \\\text { Property taxes } & ( 150 ) \\\text { Mortgage interest } & ( 950 ) \\\text { Repairs and maintenance } & ( 400 ) \\\text { Utilities } & ( 300 ) \\\text { Depreciation } & ( 200 ) \\\text { Rental loss } & \$ ( 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.

Match the Proper Deduction Method with the Correct Expenditures

Multiple Choice

Correct Answer:VerifiedUnlock this answer nowGet Access to more Verified Answers free of chargeAccess For Free

Correct Answer:
Verified
Unlock this answer now
Get Access to more Verified Answers free of charge