Vanessa Owns a Houseboat on Lake Las Vegas That She

question 13

Multiple Choice

Vanessa owns a houseboat on Lake Las Vegas that she personally uses for 25 days out of the year and rents for 280 days.For tax purposes,the houseboat is classified as

• A)neither a residence nor rental property.Because it is rented a nominal number of personal-use days,both revenue and expenses (other than those otherwise allowable)are ignored.
• B)rental property.Expenses in excess of income may be deducted although net income or loss is subject to the passive activity rules.
• C)property that is treated as a hobby which gives rise to from AGI deductions only.
• D)a combination of the taxpayer's residence and rental property.The deduction for expenses is limited to the amount of income generated by the property.

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Definitions:

Trade Discount

A reduction in the listed price of a product or service offered by sellers to buyers in the business-to-business sales.

Break-Even Default Rate

The rate at which the losses from defaulted loans equal the income generated from interest payments in a lending portfolio.

Net 30 Credit Policy

A common credit term indicating that payment is due in full 30 days after the goods are dispatched or a service is completed.

Monthly Interest Rate

The rate of interest applied to a loan or earned from an investment throughout a one-month timeline.