Please check answers & help answer question 38. if corrections are needed, shorter, concise answers are appreciated.

34. Ramone is a tax attorney, and he owns an office building that he rents for $8,500/month. He is responsible for paying all taxes and expenses relating to the building's operation and maintenance. Is Ramone engaged in the trade or business of renting real estate?

No, he does not provide substantial services in conjunction with the property or the rental. Rental income or loss is reported on schedule E.

37. Alicia and Marie own a vacation home at the beach. During the year, they rented the house for 42 days (six weeks) at $890 per week and used it for personal use for 58 days. The total costs of maintaining the home are as follows:

Mortgage interest $4,200

Property taxes700

Insurance 1,200

Utilities 3,200

Repairs 1,900

Depreciation 5,500

1. What is the proper tax treatment of this information on their tax return using the Tax Court method?

Under subsection 280a the property is considered a personal residence with rental use if the property use is greater than 14 days or 10% of total use. Alicia & Marie used the rental property for both 14 days and more than 10% of the total 100 days of use. Rental income is $5,340.

	SCHEDULE E	SCHEDULE A
Mortgage interest	1,764 (42% of $4,200)	2,436 (4,200 - 1,764)
Property taxes	294 (42% of $700)	406 (700 - 294)
Insurance	504 (42% of 1,200)
Utilities	1,344 (42% of 3,200)
Repairs	798 (42% of 1,900)
Depreciation	636 remaining rental income

1. Are there options available for how to allocate the expenses between personal and rental use? Explain.

Yes, the tax court method, IRS method, direct allocation method, & the appropriation method are all available ways to allocate expenses between personal and rental use.

1. What is the proper tax treatment of the rental income and expenses if Alicia and Marie rented the house for only 14 days?

If Alicia & Marie only used the property for 14 days, the property would qualify as personal. Only the interest & taxes would be deductible on schedule A.

38. Janet owns a home at the lake. She incurs the following expenses:

Mortgage interest $1,300

Property taxes800

Insurance 1,500

Utilities 1,800

Repairs 300

Depreciation 4,000

What is the proper treatment of the rental income and expenses in each of the following cases? Use the Tax Court allocation method, if applicable.

Case	Rental Income	Days Rented	Personal-Use Days
A	$9,000	45	10
B	12,000	55	25
C	6,000	10	30
D	22,000	365	-0-

A: Less than 14 days & over 10%

B: More than 14 days & over 10%

C: More than 14 days & over 10%

D: Less than 14 days & less than 10%