Mike and Pam Own a Cabin near Teluride, Colorado How Should Mike and Pam Report the Rental Income and the Current

question 91

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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$$\begin{array} { l r } \text { Rental income } & \$ 700 \\\text { Property taxes } & ( 250 ) \\\text { Mortgage interest } & ( 300 ) \\\text { Repairs and maintenance } & ( 100 ) \\\text { Utilities } & ( 150 ) \\\text { Rental loss } & \$ ( 100 ) \end{array}$$
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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