Jeremy and Gladys own a cabin in Sun Valley,Idaho,which they rented for 30 days.They also used the cabin with their family and friends for the ski season for 45 days.Their income and expenses were as follows: rental income $4,000,mortgage interest $3,000,property taxes $2,200,utilities $400,maintenance $400,and depreciation $4,800.How much depreciation expense can they deduct on Schedule E for the cabin? Use the IRS method for allocation of expenses.
A)$0
B)$1,600
C)$2,400
D)$4,800

Question

Quizplus · Accepted Answer

Depreciation expense is allocated based on the proportion of time the property was rented out versus the total use time. The cabin was rented for 30 days and used personally for 45 days, totaling 75 days of use. The rental use portion is 30/75, or 40% of the time. Therefore, 40% of the depreciation expense ($4,800) can be deducted, which is $4,800 * 0.40 = $1,920. However, since the options provided do not include $1,920, the closest correct option based on the provided choices is $1,600.

Jeremy and Gladys Own a Cabin in Sun Valley,Idaho,which They