Claire and Harry own a house on Hilton Head Island. During the year, Claire and Harry rent the house for 30 days to friends from Texas for $2,000. Claire and Harry use the house a total of 60 days during the year. After making the appropriate allocation of expenses between personal and rental use, the following rental loss was determined: How should Claire and Harry report the rental income and expenses for the forthcoming year? I. Report the $100 loss for AGI. II. Only expenses up to the amount of $2,000 rental income may be deducted for the year. III. Include the $2,000 in gross income, but no deductions are allowed. IV. Nothing needs to be reported.
A) Only statement I is correct.
B) Only statement II is correct.
C) Statements II and III are correct.
D) Statements III and IV are correct.
E) Statements I and III are correct.

Question

Claire and Harry own a house on Hilton Head Island. During the year, Claire and Harry rent the house for 30 days to friends from Texas for $2,000. Claire and Harry use the house a total of 60 days during the year. After making the appropriate allocation of expenses between personal and rental use, the following rental loss was determined:  How should Claire and Harry report the rental income and expenses for the forthcoming year? I. Report the $100 loss for AGI. II. Only expenses up to the amount of $2,000 rental income may be deducted for the year. III. Include the $2,000 in gross income, but no deductions are allowed. IV. Nothing needs to be reported.
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Statements II and III are correct. 
D) Statements III and IV are correct. 
E) Statements I and III are correct.

Quizplus · Accepted Answer

The Answer of Claire and Harry own a house on Hilton Head Island. During the year, Claire and Harry rent the house for 30 days to friends from Texas for $2,000. Claire and Harry use the house a total of 60 days during the year. After making the appropriate allocation of expenses between personal and rental use, the following rental loss was determined:  How should Claire and Harry report the rental income and expenses for the forthcoming year? I. Report the $100 loss for AGI. II. Only expenses up to the amount of $2,000 rental income may be deducted for the year. III. Include the $2,000 in gross income, but no deductions are allowed. IV. Nothing needs to be reported.
A) Only statement I is correct. 
B) Only statement II is correct. 
C) Statements II and III are correct. 
D) Statements III and IV are correct. 
E) Statements I and III are correct.

Claire and Harry Own a House on Hilton Head Island