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Business, 21.04.2020 00:51 zahrast14

Mike and Pam own a cabin near Teluride, Colorado. In the current year the cabin was rented for 31 days to friends. Mike and Pam used the cabin a total of 14 days during the same year. After allocating the expenses between personal and rental use, the following rental loss was determined:Rental income $700Property taxes (250)Mortgage interest (300)Repairs and maintenance (100)Utilities (150)Rental loss (100)Required:1. How should Mike and Pam report the rental income and expenses for last year? a. Report the $100 loss for AGI. b. Include the $700 in gross income, but no deductions are allowed. c. Only expenses up to the amount of $700 rental income may be deducted. d. Report the interest ($300) and taxes ($250) as itemized deductions and the other expenses for AGI. e. No reporting for the rental activity is necessary.

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