Final answer:
The statement is true as per IRS guidelines under certain conditions. Jenny's rental income is excluded because she rented for less than 15 days, whereas Shanika's income must be reported as it exceeds the 14-day threshold.
Step-by-step explanation:
he sttement that Shanika must include the $2,500 in her gross income, whereas Jenny is not required to include the $1,000 in her gross income can be true under certain tax law provisions. Normally, income from renting out your home must be included in your gross income. However, the Internal Revenue Service (IRS) provides an exception that allows you to exclude rental income from your gross income if you rent out your home for less than 15 days during the year.
Since Jenny rented her residence for only 10 days, she is not required to report the $1,000. On the other hand, Shanika rented out her residence for more than 14 days which means the rental income she received must be reported. This treatment of short-term rental income falls under the “Tax Topic 415 - Renting Residential and Vacation Property” provided by the IRS.Therefore, the assertion is A. True, provided that the rentals were indeed their personal residences and there were no additional circumstances changing their tax responsibilities.