Vanessa Owns a Houseboat on Lake Las Vegas That She

question 13

Multiple Choice

Vanessa owns a houseboat on Lake Las Vegas that she personally uses for 25 days out of the year and rents for 280 days.For tax purposes,the houseboat is classified as

• A)neither a residence nor rental property.Because it is rented a nominal number of personal-use days,both revenue and expenses (other than those otherwise allowable)are ignored.
• B)rental property.Expenses in excess of income may be deducted although net income or loss is subject to the passive activity rules.
• C)property that is treated as a hobby which gives rise to from AGI deductions only.
• D)a combination of the taxpayer's residence and rental property.The deduction for expenses is limited to the amount of income generated by the property.

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Definitions:

Quarterly Premiums

Insurance payments made every three months to maintain coverage, often used in health, life, and property insurance policies.

Endowment Policy

A life insurance contract designed to pay a lump sum after a specified term (on its 'maturity') or upon death, often used as savings or investment vehicle.

Maximum Loan

The highest amount of money that can be borrowed by an individual or organization from a lender under specific terms.

Deductible

An amount that must be paid out of pocket before an insurance provider will cover any expenses.