Colin and Megan Own a Cabin in the Mammoth Mountains,California

question 119

Multiple Choice

Colin and Megan own a cabin in the Mammoth Mountains,California.During the year,they rented it for 45 days for $10,000 and used it 12 days for personal use.The expenses for the cabin included $7,000 in mortgage interest,$3,000 in property taxes,$1,200 in utilities,$400 in maintenance,and
$3,000 in depreciation.What is their net income or loss from the cabin without considering the passive loss limitation) ? Use the IRS method for allocation of expenses.Round your answer to the nearest whole number.)

• A)$10,000 net income.
• B)$0.
• C)$1,526 net loss.
• D)$7,632 net loss.

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Definitions:

Deficient Work

Work that fails to meet the required standards or contractual obligations.

Possessory Lien

The right of a person or entity to retain possession of a property belonging to another until a debt owed by the property owner is paid.

Lienholder

An individual or entity that has a legal right or interest in a property, typically as security for a debt or charge.

Debt

An amount of money borrowed by one party from another, under the condition that it is to be paid back at a later date, usually with interest.