Benton leases a Park City condominium from Walnut Rental for $750 a month.Benton operates a carpet store in Park City.During October and November Benton does not make his monthly payments.Instead,Walnut allows him to replace the carpeting in another rental property of his instead of paying rent.What is Walnut's tax treatment of these events?
I.Walnut can capitalize the $1,500 and depreciate it.
II.Walnut can deduct the $1,500 as an operating expense.
III.Walnut includes the $1,500 in its gross income for the year.
IV.The $1,500 must be added to the basis of the condominium.

Question

Benton leases a Park City condominium from Walnut Rental for $750 a month.Benton operates a carpet store in Park City.During October and November Benton does not make his monthly payments.Instead,Walnut allows him to replace the carpeting in another rental property of his instead of paying rent.What is Walnut's tax treatment of these events?
I.Walnut can capitalize the $1,500 and depreciate it.
II.Walnut can deduct the $1,500 as an operating expense.
III.Walnut includes the $1,500 in its gross income for the year.
IV.The $1,500 must be added to the basis of the condominium.
​

Quizplus · Accepted Answer

The Answer of Benton leases a Park City condominium from Walnut Rental for $750 a month.Benton operates a carpet store in Park City.During October and November Benton does not make his monthly payments.Instead,Walnut allows him to replace the carpeting in another rental property of his instead of paying rent.What is Walnut's tax treatment of these events?
I.Walnut can capitalize the $1,500 and depreciate it.
II.Walnut can deduct the $1,500 as an operating expense.
III.Walnut includes the $1,500 in its gross income for the year.
IV.The $1,500 must be added to the basis of the condominium.
​

Benton Leases a Park City Condominium from Walnut Rental for $750