Charles and Sarah own a home in Palm Springs,CA.During the year,they rented the house for 40 days for $5,000 and used it for personal use for 18 days.The house remained vacant for the remainder of the year.The expenses for the house included $16,000 in mortgage interest,$4,500 in property taxes,$1,000 in utilities,$1,200 in maintenance,and $9,800 in depreciation.What is the deductible loss for the rental of their home (without considering the passive loss limitation)? Use the Tax Court method for allocation of expenses.
A)$0
B)$5,000 net income
C)$17,414 net loss
D)$27,500 net loss

Question

Quizplus · Accepted Answer

Under the Tax Court method, since the property was rented for less than 15 days, the rental income is not taxable, and expenses are not deductible. Therefore, there is no deductible loss.

Charles and Sarah Own a Home in Palm Springs,CA