rental_activities_solution

rental_activities_solution - Solution: Rental activities...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
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?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 3

rental_activities_solution - Solution: Rental activities...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online