Katie and Mike own a home in Newport Beach,California.During the year,they rented the house for 80 days for $24,000 and used it for personal use for 30 days.The expenses for the house included $20,000 in mortgage interest,$8,500 in property taxes,$6,000 in utilities,$2,000 in maintenance,and $12,000 in depreciation.What is the deductible loss for the rental of their home (without considering the passive loss limitation)? Use the IRS 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 IRS method, since the home was rented for less than 15 days, the rental income is not taxable, and expenses are not deductible. Therefore, there is no deductible loss.

Katie and Mike Own a Home in Newport Beach,California