Tax Accounting Final Exam questions and answers rated 100% correct.

Tax Accounting Final Exam questions
and answers rated 100% correct.

When does a taxpayer use a dwelling unit as a home? ANS - if the number of days that he uses it for
personal purposes exceeds the greater of



14 Days



OR



10% of the number of Days that it is rented at a fair rental price.



The taxpayer did not use the residential rental property for personal purposes. Explain the tax treatment
of rental revenue and expenses related to the property. ANS - 1. All rent payments that the taxpayer
received are taxable



2. All property-related expenses are fully deductible.



3. A net loss on Schedule E may be limited by the at-risk rules and the passive-activity rules.



The taxpayer did use residential rental property for personal purposes. Explain the tax treatment of
rental revenue and expenses related to the property. ANS - 1. All rental payments that the tax received
are taxable



2. Only the "rental portion" of the property related expenses is deductible.



The taxpayer's personal use of the residential rental property caused it to be considered a home, but the
property was rented to third parties for fewer than 15 days.