Question

Shanna, a calendar year and cash basis taxpayer, rents property from Janice. As part of the rental agreement, Shanna pays $8,400 rent on April 1, 2018, for the 12 months ending March 31, 2019.

a. How much is Shanna’s deduction for rent expense in 2018?
b. Assume the same facts, except that the $8,400 is for 24 months’ rent ending March 31, 2020. How much is Shanna’s deduction for rent expense in 2018?

Answer 1

Assuming Shanna rented the property for a business purpose, then:

A) Shanna can deduct $8,400 for rent expense in 2018.

B) If the rent paid is for 24 months, then Shanna can only deduct 9 months worth of rent for 2018 = ($8,400 / 24) x 9 = $350 x 9 = $3,150