Mike and Pam Own a Cabin near Teluride, Colorado

question 42

Multiple Choice

Mike and Pam own a cabin near Teluride, Colorado. In the current year the cabin was rented for 8 days to friends. Mike and Pam used the cabin a total of 82 days during the same year. After allocating the expenses between personal and rental use, the following rental loss was determined: How should Mike and Pam report the rental income and expenses for last year?

• A) Report the $100 loss for AGI.
• B) Include the $700 in gross income, but no deductions are allowed.
• C) Only expenses up to the amount of $700 rental income may be deducted.
• D) Report the interest $300) and taxes $250) as itemized deductions and the other expenses for AGI.
• E) No reporting for the rental activity is necessary.

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Definitions:

Plan Of Action

A detailed strategy outlining the steps needed to accomplish a specific goal or objective.

Little To No Involvement

Refers to situations or contexts where individuals or groups contribute minimal effort or have minimal participation.

Achieving Goals

The process of setting objectives and taking steps to accomplish them within a specified timeframe.

Quarterly Estimated Tax Payments

Tax payments made quarterly by individuals and businesses on income not subject to withholding, including self-employment income.