Question

Kate is an accrual basis, calendar-year taxpayer. On November 1, 2018, Kate leased out a building for $4,500 a month. On that day Kate received 7 months rental income on the building, a total of $31,500 ($4,500 × 7 months). How much income must Kate include on her 2018 tax return as a result of this transaction?(A) 4,500 (B) 54,000 (C) 9,000 (D) 31,500 (E) none

Answer 1

Option (C) is correct.

Step-by-step explanation:

Given that,

On November 1, 2018

Kate leased out a building = $4,500 a month

Received 7 months rental income = $31,500

Kate include on her 2018 tax return as a result of this transaction:

= Value of leasing out a building for a month × 2

= $4500 × 2

= $9,000

Therefore, the Kate include on her 2014 tax return as a result of this transaction = $ 9000