Which of the following statements regarding the IRS and/or Tax Court approaches to allocating home-related expenses between rental use and personal use is correct?
A)The Tax Court approach allocates more property tax and interest expense to rental use than does the IRS approach.
B)The Tax Court and the IRS approaches allocate the same amount of expenses, other than interest expense and property taxes, to rental use.
C)The IRS approach allocates interest expense and property taxes to rental use based on the ratio of the number of days of rental use to the total days of the year.
D)None of the choices are correct.

Question

Quizplus · Accepted Answer

CThe Tax Court and the IRS approaches do allocate the same amount of expenses, other than interest expense and property taxes, to rental use. This is because both approaches generally follow the principle of dividing expenses based on the use of the property (rental vs. personal). However, for interest expense and property taxes, the IRS approach specifically allocates these expenses based on the ratio of the number of days of rental use to the total days of the year, which is a clear and straightforward method for dividing these particular expenses between rental and personal use.

Which of the Following Statements Regarding the IRS And/or Tax