rental_activities_solution - Solution Rental activities(Sec...

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Solution : Rental activities (Sec. 280A) Part 1: Rental property – minimal personal use. Joan owned a cabin near the local ski resort. During the year Joan and her family use the cabin a total of 10 days. Joan also rents the cabin to out-of-state skiers for a total of 65 days during the year generating rental income of $10,000. Joan incurs the following expenses related to the cabin: Expense Amount Property taxes 1,500 Mortgage interest 3,000 Utilities 2,000 Insurance 1,500 Security and snow removal 2,500 Advertising 300 In addition, Joan would have been entitled to $12,000 of MACRS depreciation if the property had been entirely rental property held for investment. Required : First, why is this considered rental property (minimal personal use)? The cabin is not used by the taxpayer for more than the greater of: (1) 14 days, or (2) 10% of the rental days. Joan and her family did not use the cabin for more than 14 days; therefore it’s considered rental property. The Sec 280A limitations don’t apply. What amounts would Joan report on her tax return?
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This note was uploaded on 09/09/2011 for the course TAX 6845 taught by Professor Kelliher,c during the Fall '08 term at University of Central Florida.

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rental_activities_solution - Solution Rental activities(Sec...

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