Q16 (Classification of Deductions). Problem #32 | Max

[Required: (1) Classify the rental activity into trade or business or production-of-income.

(2) Determine whether attorneys fee is a deduction for AGI or deduction from AGI item.]

32. LO3 Max owns an office building that he rents for $750 a month. Under the terms of the lease, the tenant is responsible for paying all property taxes and costs related to the buildings operation and maintenance. The only cost to Max in relation to the lease is an annual legal fee for renewing the lease. Is Max engaged in the trade or business of renting real estate? How would you classify his deduction for the attorneys fee?