Richard owns a cabin in Utah that he rented for $4,000 for 21 days.He lived there for a total of 120 days.The expenses for the home included $8,000 in mortgage interest,$1,200 in property taxes, $1,300 in maintenance and utilities,and $3,500 in depreciation.How much net income or loss from the Utah home would Richard report for the current year use the IRS method)? Round your answer to the nearest whole number)

Question

Quizplus · Accepted Answer

To calculate net income or loss using the IRS method, we need to subtract the total expenses from the total rental income. Richard's total rental income is $4,000 for 21 days, which means $190.48 per day for 120 days, so a total of $22,858.40. His total expenses are $8,000 + $1,200 + $1,300 + $3,500 = $14,000. 
Therefore, his net income before depreciation is $8,858.40 ($22,858.40 - $14,000). 
To calculate the net income after depreciation, we need to subtract the depreciation expense from the net income before depreciation. 
So, the net income or loss will be $8,858.40 - $3,500 = $5,358.40, which rounds to $1,915 when rounded to the nearest whole number. So, the correct answer is C.

Richard Owns a Cabin in Utah That He Rented for $4,000