Hugh and Mary own a cabin in Big Bear that they rented for 45 days at $4,500.They used the cabin for personal use for 30 days during the year.The allocated expenses related to the cabin of $6,000,resulting in a net loss of $1,500 for this rental activity.What is the proper tax treatment of these amounts by Hugh and Mary?

Question

Quizplus · Accepted Answer

Hugh and Mary must report the rental income and expenses on Schedule E, but since the cabin was used for personal purposes for more than 14 days or 10% of the total days rented, they cannot deduct expenses in excess of rental income.

Hugh and Mary Own a Cabin in Big Bear That