Brad and Kate Received $9,500 for Rent from Mike and Janet,who

question 8

Multiple Choice

Brad and Kate received $9,500 for rent from Mike and Janet,who are renting their home in Santa Ana,California.Brad and Kate did not use this property for personal use.The rent covers eight months from August 1 of the current year to March 31 of the following year.The amount also includes a security deposit of $1,500.How much should Brad and Kate report as rental income in the current tax year?

• A)$1,500
• B)$5,000
• C)$8,000
• D)$9,500

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Definitions:

Fair Value

An estimate of the market value of an asset or liability, based on the price at which participants would willingly transact in an orderly transaction.

Trading Securities

Financial instruments that are purchased with the intention of selling them in the short term to profit from price fluctuations.

Effective Interest

The real cost of borrowing or the actual interest rate earned, considering compounding and fees.