25 May Question 1. Robyn rents her beach house for 60 days and uses it for personal use for 30 days during the year. The rental income is $6,000 and the expenses are as follows:
Question
1. Robyn rents her beach house for 60 days and uses it for personal use for 30 days during the year. The rental income is $6,000 and the expenses are as follows:
| Mortgage interest | $9,000 |
| Real estate taxes | 3,000 |
| Utilities | 2,000 |
| Maintenance | 1,000 |
| Insurance | 500 |
| Depreciation (rental part) | 4,000 |
Using the IRS approach, totalexpenses that Robyn can deduct on her tax return associated with the beach house are:
a. $0.
b. $6,000.
c. $8,000.
d. $12,000.
e. None of the above.
2. If a vacation home is determined to be a personal/rental use residence, which of the following statements is correct?
a. All rental income is included in gross income.
b. All rental related expenses that are deductible are classified as deductions fromAGI.
c. Expenses must be allocated between rental and personal use.
d. Only a. and c. are correct.
e. a., b., and c. are correct.
3. Bob and April own a house at the beach. The house was rented to unrelated parties for 8 weeks during the year. April and the children used the house 12 days for their vacation during the year. After properly dividing the expenses between rental and personal use, it was determined that a loss was incurred as follows:
| Gross rental income | $4,000 | |
| Less: Mortgage interest and property taxes | $3,500 | |
| Other allocated expenses | 2,000 | (5,500) |
| Net rental loss |
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