Accounting 405 Federal Taxation Clark and Lois Kent purchased a beach house in Stone Harbor, New Jersey in early 20XX, Although they intended to use the each house occasionally for recreational purposes, they also planned to rent it through the realty agency that had handled the purchase in order to help pay the mortgage payments, property taxes, and maintenance costs. Clark is surgeon, and Lois is a counselor. The beach house was in need of substantial repairs. Rather than hiring a contractor, Clark and Lois decided they would make the repairs themselves. During both high school and college, Clark had worked summers in construction. In addition, he had taken an advanced course in woodworking and related subjects from a local community college several years ago. During 20XX according to a log maintained by the Kent's, they occupied the beach house 38 days and rented it 49 days. The log also indicated that on 24 of the 38 days that they occupied the beach house, one or both of them were engaged in work on the beach house. The Kent's have come to you for advice in preparing their 20XX joint tax return. The couple is unsure whether they are able to treat the beach house as a rental property and deduct a prorated share of the property taxes, mortgage interest, utilities, maintenance and repairs, and depreciation in determining their net loss from the beach house. Or, are they required to treat the house as a vacation home for which the deductions are limited to rent income? Using Codes Section 280A and CCH online, advise the Kent's on the proper tax treatment of the beach house. 1. Based on your research, how should the beach house be treated? Highlight one. As a rental property As a vacation home 2. List the two most important primary resources used in making your decision. Do not give CCH paragraph numbers or Code or regulation sections. Your answer should be a case, or IRS ruling: 3. Briefly explain why you answered as you did. Accounting 405 Federal Taxation Clark and Lois Kent purchased a beach house in Stone Harbor, New Jersey in early 20XX, Although they intended to use the each house occasionally for recreational purposes, they also planned to rent it through the realty agency that had handled the purchase in order to help pay the mortgage payments, property taxes, and maintenance costs. Clark is surgeon, and Lois is a counselor. The beach house was in need of substantial repairs. Rather than hiring a contractor, Clark and Lois decided they would make the repairs themselves. During both high school and college, Clark had worked summers in construction. In addition, he had taken an advanced course in woodworking and related subjects from a local community college several years ago. During 20XX according to a log maintained by the Kent's, they occupied the beach house 38 days and rented it 49 days. The log also indicated that on 24 of the 38 days that they occupied the beach house, one or both of them were engaged in work on the beach house. The Kent's have come to you for advice in preparing their 20XX joint tax return. The couple is unsure whether they are able to treat the beach house as a rental property and deduct a prorated share of the property taxes, mortgage interest, utilities, maintenance and repairs, and depreciation in determining their net loss from the beach house. Or, are they required to treat the house as a vacation home for which the deductions are limited to rent income? Using Codes Section 280A and CCH online, advise the Kent's on the proper tax treatment of the beach house. 1. Based on your research, how should the beach house be treated? Highlight one. As a rental property As a vacation home 2. List the two most important primary resources used in making your decision. Do not give CCH paragraph numbers or Code or regulation sections. Your answer should be a case, or IRS ruling: 3. Briefly explain why you answered as you did