Reference no: EM132318505

Question

1) Rental properties that are also used as vacation homes fall under one of two categories: (1) primarily rental; or (2) primarily personal. (True or False)

a) True

b) False

2) In the case of a primarily personal property, a taxpayer may report a net loss as long as the correct allocation method was used. (True or False)

a) True

b) False

3) The two methods that may be used to allocate expenses between personal and rental use of properties are the IRS method and the Tax Court method. (True or False)

a) True

b) False

4) A primarily rental property must report its income and expenses on a Schedule E. (True or False)

a) True

b) False

5) On June 1 of the current year, Jack and Angie purchased a rental beach house for $900,000 and rented it right away. Of that amount, $600,000 was for the land value. How much depreciation deduction can Jack and Angie take in the current year? (You may need to refer to the depreciation tables.)

A) $11,820

B) $10,909

C) $5,910

D) $17,730

6) Jamison owns a rental cabin in Mammoth, and travels there for maintenance three times a year, between January and June. The round trip to Mammoth from San Diego where Jamison lives, is approximately 405 miles. How much travel costs can Jamison deduct per year related to his rental cabin? (Round your answer to the nearest whole number)

A) $217

B) $622

C) $1,324

D) $405

7) On August 1 of the current year, Brad and Kate received $9,500 for rent from Mike and Janet, who are renting their home in Santa Ana, California. Brad and Kate did not use this property for personal use. The rent covers eight months from August 1 of the current year to March 31 of the following year. The amount also includes a security deposit of $1,500. How much should Brad and Kate report as rental income in the current tax year?

A) $8,000

B) $1,500

C) $5,000

D) $9,500