Mike and Pam Own a Cabin near Teluride,Colorado

question 101

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:
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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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