Jack and Cheryl Own a Cabin near Copper Mountain, Colorado

question 41

Multiple Choice

Jack and Cheryl own a cabin near Copper Mountain, Colorado. During the year, Jack and Cheryl rent the cabin for 30 days to friends for $1,800. Jack and Cheryl use the cabin a total of 60 days during the year. After making the appropriate allocation of planned expenses between personal and rental use, the following rental loss was determined:
?
$$\begin{array} { l r } \text { Rental income } & \$ 1,800 \\\text { Property taxes } & ( 250 ) \\\text { Mortgage interest } & ( 950 ) \\\text { Repairs and maintenance } & ( 200 ) \\\text { Utilities } & ( 300 ) \\\text { Depreciation } & ( 400 ) \\\text { Rental loss } & \$ ( 300 ) \end{array}$$
How should Jack and Cheryl report the rental income and expenses for the forthcoming year?
I.Only expenses up to the amount of $1,800 rental income may be deducted for the year.
II.Only depreciation in the amount of $100 may be deducted.
III.The amount of the disallowed depreciation deduction ($300) can be carried forward.
IV.Nothing needs to be reported.
?

• A)Only statement I is correct.
• B)Statements II and III are correct.
• C)Statements I, II and III are correct.
• D)Statements III and IV are correct.
• E)Statements I, II, III, and IV.

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