Answered step by step
Verified Expert Solution
Question
1 Approved Answer
Alicia and Marie own a vacation home at the beach. During the year, they rented the house for 42 days (six weeks) at $890 per
Alicia and Marie own a vacation home at the beach. During the year, they rented the house for 42 days (six weeks) at $890 per week and used it for personal use for 58 days. The total costs of maintaining the home are as follows: Mortgage interest Property taxes Insurance Utilities Repairs $ 4,200 700 1,200 3,200 1,900 5,500 Depreciation Required: a. What is the proper tax treatment of this information on their tax return using the Tax Court method? Note: Use 365 days in a year. Round your intermediate computations to 5 decimal places and final answers to nearest whole dollar value. Income Answer is complete but not entirely correct. Schedule E 5,340 Schedule A 5,340 Answer is complete but not entirely correct. Schedule E Schedule A Income $ 5,340 5,340 x Mortgage interest $ 483 $ 1,764 x Property taxes $ 81 294 X Insurance $ 504 504 Utilities $ 1,344 1,344 Repairs 798 798 x Depreciation 2,310 2,310 Net income (180) .Are there options available for how to allocate the expenses between personal and rental use? Note: You may select more than one answer. Single click the box with the question mark to produce a check mark for a correct answer and double click the box with the question mark to empty the box for a wrong answer. Any boxes left with a question mark will be automatically graded as incorrect. Tax court method IRS method Direct allocation method Appropriation method Only rental method Tax court method IRS method Direct allocation method Appropriation method Only rental method c. What is the proper tax treatment of the rental income and expenses if Alicia and Marie rented the house for only 14 days? Property would be primarily personal, and none of the income would be included and only the interest and taxes would be deductible on Schedule A
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started