Question :

Robby owns a small condo near the beach. During the year, the home was used as follows-

• Rented out for fair rent 36 days (rental income total, $10,800)
• Used for personal vacations 18 days

The expenses relating to this home were as follows-

• Mortgage interest $20,000
• Property taxes 7,000
• Utilities & phone 2,500
• Insurance 5,000
• Depreciation on structure 6,000

Evaluate the amount & character of Robby's deductions for this vacation home considering the cost allocation method that the IRS prefers is used.

1. ___ Robby's deduction for AGI is -

2. ___ The amount that Robby can take as an itemized deduction is -

A. $9,000

B. $24,337

C. $27,000

D. $0

E. $18,000

F. $16,200

G. $10,800

H. None of the other answers is correct

I. $40,500