Brad and Kate received $9,500 for rent from Mike and Janet,who are renting their home in Santa Ana,California.Brad and Kate did not use this property for personal use.The rent covers eight months from August 1 of the current year to March 31 of the following year.The amount also includes a security deposit of $1,500.How much should Brad and Kate report as rental income in the current tax year?

Question

Quizplus · Accepted Answer

The rent covers eight months from August 1 of the current year to March 31 of the following year. So, the rental income for the current tax year is 8/12 * $9,500 = $6,333.33. However, the security deposit of $1,500 is not included in the rental income. Therefore, the rental income that Brad and Kate should report in the current tax year is $6,333.33 - $1,500 = $4,833.33.

Brad and Kate Received $9,500 for Rent from Mike and Janet,who