Question

which of the following taxpayers has correctly dealt with a type of rental expense?
alice travels to another state to collect rental income and stays for vacation. she deducts all the travel expenses as rental expenses in the year she took the trip.
Bob rents a piece of equipment for use in rental activities. he deducts the cost of renting the equipment un the year
connie deduct all points with the mortgage on her rental property in the year they are paid
Dave pays charges to the city for putting sidewalks on the street where his rental property is located Dave deducts the charges in the year paid

Answer 1

Income received for letting someone use or reside in our property is rental income. The following taxpayer has correctly dealt with a type of rental expense:

Option (b) is correct. If an equipment is rented for business purposes, IRS allows the deducion for cost of renting equipment in the year. Bob rents a piece of equipment for use in rental activities. Deducting the cost of renting the equipment in the year, is correctly dealt as per tax purposes.

Option (a) is incorrect. In order to deduct, travel expenses, the expenses must have been primary incurred for rental activity. Rental activities do not include staying for vacation. Alice travels to another state to collect rental income and stays for vacation. Hence, Alice cannot deduct all the travel expenses as rental expenses in the year she took the trip.

Option (c) is incorrect. All the points with the mortgage on rental property is allowed deduction in the year they are paid only if a taxpayer meets six requirements of the IRS. Points that don't meet those requirements are allowed to be deducted over the life of the loan.

Option (d) is incorrect. Dave pays charges to the city for putting sidewalks on the street where his rental property is located. Dave deducts the charges in the year paid. This taxpayer has not correctly dealt with a type of rental expense.