1. Every year, a college basketball tournament is held in Bridget\'s city. She r
ID: 2579771 • Letter: 1
Question
1. Every year, a college basketball tournament is held in Bridget's city. She rents out her condominium during the week-long tournament while she goes out of town on vacation. She receives $1,350 rental income for the week. As her Tax Professional, how do you report this income?
A. The income and expenses are reported on Schedule E., B. The income is reported on Schedule E, but no expenses are allowed, because Bridget is not in the rental business., C. The income is reported on the Other Income section of Form 1040, and rental expenses, up to the amount of income, are deducted on Schedule A., D. The income is not reported because the property was rented for fewer than 15 days.
2. Rosa replaced a broken heating and air conditioning unit in one of her rental houses. How will this expense be reported on Schedule E? (She will NOT make the small taxpayer election for small taxpayers.)
A. As a repair, deducted as a current expense., B. As an improvement, depreciated over 15 years., C. As an improvement, depreciated over 27 1/2 years., D. As an improvement, depreciated over 31 1/2 years.
Explanation / Answer
If you receive rental income for the use of a dwelling unit, such as a house or an apartment, you may deduct certain expenses. These expenses, which may include mortgage interest, real estate taxes, casualty losses, maintenance, utilities, insurance, and depreciation, will reduce the amount of rental income that's subject to tax. You'll generally report such income and expenses on Form 1040 (PDF), U.S. Individual Income Tax Return, and on Form 1040, Schedule E (PDF),
Option C
Replacing broken heating and air conditioning unit does not improve the assets vlut so it should report as s repair,deducted as a current expenses
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