Question

42. Martha rents part of her personal residence in the summer for 3 weeks for $3,000. Anne rents all of her personal residence for one week in December for $2,500. Anne is not required to include the $2,500 in her gross income whereas Martha is required to include the $3,000 in her gross income.

Answer 1

Martha and Anne generate rental income, but Martha is required to include it in her gross income while Anne is not due to specific exclusions in the tax code.

Step-by-step explanation:

Martha renting part of her residence and Anne renting all of her personal residences are both examples of generating rental income. The difference lies in whether or not they are required to include the rental income in their gross income for tax purposes.

Martha is required to include the $3,000 rental income in her gross income because she only rents part of her residence.

Anne, on the other hand, is not required to include the $2,500 rental income in her gross income because she rents all of her residences. This is because there are specific exclusions in the tax code for individuals who rent out their entire personal residence for 14 days or less in a year.