hoyt rented office space two years ago to harris, receiving the first and last months rent plus a security…

hoyt rented office space two years ago to harris, receiving the first and last months rent plus a security deposit of $1,000. in early january of this year, harris moves and hoyt refunds $250 of the deposit and keeps the remainder to cover $500 which is spent for repairs to the office space and one week of unpaid rent that amounts to $250. how would this information be reflected on hoyts tax return this year? 1. $750 income and $500 deduction 2. $750 income and no deduction 3. $250 income and $500 deduction 4. no income is recognized, but a $250 deduction is allowed. question 23 1 pts tyler has rented a house from camarah since last year. the rent is usually $1,200 per month, but camarah reduced the monthly rent down to $200 for all twelve months this year in exchange for tyler putting in an inground pool in the backyard. the improvement has a fair market value of $20,000. how much total rental income must camarah report this year? 1. 14,400 2. 12,000 3. 2,400 4. 22,400

hoyt rented office space two years ago to harris, receiving the first and last months rent plus a security deposit of $1,000. in early january of this year, harris moves and hoyt refunds $250 of the deposit and keeps the remainder to cover $500 which is spent for repairs to the office space and one week of unpaid rent that amounts to $250. how would this information be reflected on hoyts tax return this year? 1. $750 income and $500 deduction 2. $750 income and no deduction 3. $250 income and $500 deduction 4. no income is recognized, but a $250 deduction is allowed. question 23 1 pts tyler has rented a house from camarah since last year. the rent is usually $1,200 per month, but camarah reduced the monthly rent down to $200 for all twelve months this year in exchange for tyler putting in an inground pool in the backyard. the improvement has a fair market value of $20,000. how much total rental income must camarah report this year? 1. 14,400 2. 12,000 3. 2,400 4. 22,400

Answer

Explanation:

Step1: Analyze Hoyt's case

Hoyt keeps $1000 - 250=750$ from the security - deposit. The $500$ for repairs and $250$ for unpaid rent are not deductible as they are covered by the non - refunded deposit. So, Hoyt has $750$ income and no deduction.

Step2: Analyze Camarah's case

The normal rent is $1200$ per month, but it was reduced to $200$ per month for 12 months. The reduction in rent is in exchange for an improvement (pool) with a fair - market value of $20000$. The total rental income is calculated as the sum of the actual rent received and the value of the improvement in lieu of rent. The actual rent received is $200\times12 = 2400$. The value of the improvement is $20000$. So the total rental income is $2400+20000=22400$.

Answer:

  1. B. $750$ income and no deduction
    1. $22400$