Hoyt Rented Office Space Two Years Ago to Harris,receiving the First

question 42

Multiple Choice

Hoyt rented office space two years ago to Harris,receiving the first and last months' rent plus a security deposit of $1,000.In early January of this year,Harris moves and Hoyt refunds $250 of the deposit and keeps the remainder to cover $500 which is spent for repairs to the office space and one week of unpaid rent that amounts to $250.How would this information be reflected on Hoyt's tax return this year?

• A)$750 income and $500 deduction
• B)$750 income and no deduction
• C)$250 income and $500 deduction
• D)No income is recognized,but a $250 deduction is allowed.

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Definitions:

Gross Profit

The difference between revenue and the cost of goods sold before deduction of overheads, payroll, taxation, and interest payments.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the cost of materials and labor.

Landscaping Supplies

Materials and products used in the creation and maintenance of landscaped areas, such as plants, soil, mulch, and tools.

Accounts Receivable

Money owed to a business by its customers for goods or services delivered but not yet paid for.