Kenneth Lived in His Home for the Entire Year Except

question 54

Multiple Choice

Kenneth lived in his home for the entire year except for when he rented his home (near a very nice ski resort) to a married couple for 14 days in December. The couple paid Kenneth $14,000 in rent for the two weeks. Kenneth incurred $1,000 in direct expenses relating to the home for the 14 days. Which of the following statements accurately describes the manner in which Kenneth should report his rental receipts and expenses for tax purposes?

• A)Kenneth would include the rental receipts in gross income and deduct the rental expenses for AGI.
• B)Kenneth would exclude the rental receipts from gross income and deduct the rental expenses for AGI.
• C)Kenneth would include the rental receipts in gross income and would not deduct the rental expenses because he used the residence for personal purposes for most of the year.
• D)Kenneth would exclude the rental receipts, and he would not deduct the rental expenses.

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Definitions:

Subsidies

Financial support provided by the government to individuals, businesses, or institutions to encourage certain activities or reduce the cost of products.

GDP

Gross Domestic Product, a measure of the economic performance of a country, calculated by adding the total value of all goods and services produced within its borders over a specific time period.

Domestic Output

The total value of goods and services produced within a country's borders in a specific time period.

GDP

Gross Domestic Product is the sum market value of all final goods and services produced domestically in a country within a specific period.