Your friend comes in and asks you to prepare her taxes in exchange for a fee. You
Question:
Your friend comes in and asks you to prepare her taxes in exchange for a fee. You insist that because he is your friend, you will only charge him half of your normal rate. Your friend is relieved because he knows that he might be owing taxes this year since he rented out his rental property for a longer period than the previous year and his profit is a lot larger than it was the previous year. He tells you that because he only used the rental property for personal reasons for only three months out of the year instead of the six months he usually uses it and therefore the property was rented out for a majority of the year, he thinks the full amount of expenses should be applied to the property instead of allocating them between rental and personal. You are aware that your friend is trying really hard to be successful and paying less in taxes would help him out tremendously this year.
How would you treat the expenses? What would be the responses to your friend?
South Western Federal Taxation 2015
ISBN: 9781305310810
38th edition
Authors: William H. Hoffman, William A. Raabe, David M. Maloney, James C. Young