June is a widow who lives near Pebble Beach. For each of the past five years (since the death of her husband, an avid golfer), she has rented her home for 14 days to Fuzzy, a professional golfer who participates in the local golf classic. The rent income is $14,000. During this period, June visits her sister in Reno. A neighbor who is a CPA advises June that she does not need to report the $14,000 on her federal income tax return because she did not rent her house for more than two weeks during the year.

In 2012, Fuzzy and his family arrived as scheduled. At the end of the period, Fuzzy's wife contacts June and explains that their two-year-old child is ill. She asks if they can rent for two more days until the child feels better. June agrees but says that she will not accept any rent for the additional stay. When June returns Home, she finds the check on her counter is for $16,000 rather than $14,000. The check is enclosed in a thank-you-note from Fuzzy and his family.

On her 2012 Federal income tax return, June does not report any rental income or deduct any rental expenses. According to her records, she rented her house for exactly two weeks.

• Can you Justify June's treatment of the rental income and expenses?

Answer rating: 100% (QA)

No Junes treatment of the rental income and expenses is not correct According to the IRS rental inco... View the full answer