Suzanne owns a vacation home at the beach in which she lived for 30 days and rented out for 61 days during the current year. Her gross rental income is $2,600. Her total expenses for the vacation home are as follows:

Mortgage interest…………………………….$1,500

Property taxes……………………………………900

Utilities…………………………………………..700s

Maintenance…………………………………….300

Depreciation for entire house1,100

a. Compute Suzanne’s net rental income using the IRS method for allocating expenses.

b. Compute Suzanne’s net rental income using the Tax Court method (also known as the Bolton method) for allocating expenses.

c. Which method results in less taxable income? Explain.



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