Question

Vernon is a cash basis taxpayer with a calendar tax year. On October 1, 2019, Vernon entered into a lease to rent a building for use in his business at $3,000 a month. On that day Vernon paid 18 months' rent on the building, a total of $54,000 ($3,000 × 18 months). How much may Vernon deduct for rent expense on his 2019 tax return?

Answer 1

$9,000

Step-by-step explanation:

Calculation of the amount Vernon deduct for rent expense on his 2019 tax return will be :

Rent(lease)×Numbers of months used

Where:

Rent (lease)= 3,000

Numbers of months=3

Hence:

3,000×3=$9,000

Therefore the amount Vernon deduct for rent expense on his 2019 tax return is $9,000 which is 3000×3 month.

The 3 months is from 1st October to 31st December.