Dahlia Rents a Condo Owned by Bonnie

question 23

Multiple Choice

Dahlia rents a condo owned by Bonnie. Both individuals are cash basis taxpayers. Dahlia uses the condo as her personal residence. Dahlia pays Bonnie $1,000 monthly, and pays $1,200 on October 1st and April 1st of each year as part of the lease agreement. The $1,200 payments are made directly to the county treasurer for real estate property taxes. What is the income tax treatment of these events? I. Bonnie can deduct the $1,200 payments for adjusted gross income as a property tax. II. Bonnie includes the $1,000 monthly receipts in her gross income. III. Bonnie must include the $1,200 payments in her gross income. IV. Dahlia can deduct the $1,000 monthly payments from her adjusted gross income.

• A) Only statement II is correct.
• B) Only statements I, II, and IV are correct.
• C) Only statement III is correct.
• D) Only statements I , II, and III are correct.
• E) Only statements II, III, and IV are correct.

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Definitions:

Objectivity

A state or quality of being unbiased and impartial, focusing on facts and observable phenomena.

Biases

Systematic patterns of deviation from norm or rationality in judgment, leading to partial, prejudiced, or unfair conclusions.

Data Collection

The process of gathering and measuring information on targeted variables to answer relevant questions and evaluate outcomes.

Control Group

In experimental research, the group of participants that does not receive the treatment or intervention being tested, used as a baseline to measure the effects of the treatment.