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Explunationvr
The
Groves
own
a
beach
house
as
a
second
home.
This
year, the
Groves
used
the
beach
house
personally
for
4
months.
For
14
days
during
the
summer,
the
Groves
rented
out
their
beach
house
for
$5,000
total
to
friends.
Which
statement
is
true
regarding
the
taxability
of
the
Groves'
beach
house?
A.
$5,000
is
included
in
gross
income.
B.
Mortgage
interest
paid
on
the
beach
house
is
deductible.
C.
Allrepair
expenses
on
the
beach
house
are
deductible.
D
Depreciation
expense
on
the
beach
house
is
deductible.
S]ERE(]y
x
Choice
"A"
is
incorrect.
Because
the
Groves
rented
their
beach
house
for
fewer
than
15
days,
it
is
treated
as
a
personal
residence
and
the
rental
income
is
excluded
from
gross
income.
Mortgage
interest
and
real
estate
taxes
are
deductible
as
itemized
deductions
on
schedule
A
(subject
to
limitations).
Choice
"B"
is
correct.
Because
the
Groves
rented
their
beach
house
for
fewer
than
15
days,
it
is
treated
as
a
personal
residence.
Therefore,
the
rental
income
is
excluded
from
gross
income
and
mortgage
interest
and
real
estate
taxes
are
deductible
as
itemized
deductions
on
schedule
A
(subject
to
limitations).
Choices
"C"
and
"D"
are
incorrect.
Because
the
Groves
rented
their
beach
house
for
fewer
than
15
days,
it
is
treated
as
a
personal
residence.
Therefore,
repairs,
utilities,
depreciation,
and
other
allowed
rental
expenses
are
not
deductible.
