Kenneth Lived in His Home for the Entire Year Except

question 54

Multiple Choice

Kenneth lived in his home for the entire year except for when he rented his home (near a very nice ski resort) to a married couple for 14 days in December. The couple paid Kenneth $14,000 in rent for the two weeks. Kenneth incurred $1,000 in direct expenses relating to the home for the 14 days. Which of the following statements accurately describes the manner in which Kenneth should report his rental receipts and expenses for tax purposes?

• A)Kenneth would include the rental receipts in gross income and deduct the rental expenses for AGI.
• B)Kenneth would exclude the rental receipts from gross income and deduct the rental expenses for AGI.
• C)Kenneth would include the rental receipts in gross income and would not deduct the rental expenses because he used the residence for personal purposes for most of the year.
• D)Kenneth would exclude the rental receipts, and he would not deduct the rental expenses.

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Definitions:

Perseverance

Perseverance is the persistence in doing something despite difficulty or delay in achieving success.

Intellectualization

Intellectualization is a defense mechanism in which an individual focuses on reasoning and logic to avoid confronting emotional conflicts and stressors.

Defence Mechanism

Psychological strategies brought into play by the unconscious mind to manipulate, deny, or distort reality in order to defend against feelings of anxiety and unacceptable impulses.

Interpersonal Attraction

The force that draws people together, leading to friendships, romantic relationships, or other social connections.