ACC 307 Federal Taxation

Accounting
Tutor: None Selected Time limit: 1 Day

Analyze at least two (2) of the IRS guidelines on the deductibility of expense related to vacation homes in order to determine the fundamental way in which taxpayers are likely to abuse them, and ascertain the most effective means for the IRS to detect taxpayer abuse. Provide support for your rationale.

Jul 17th, 2015

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IRS Summertime Tax Tip 2013-08, July 19, 2013

A vacation home can be a house, apartment, condominium, mobile home or boat. If you own a vacation home that you rent to others, you generally must report the rental income on your federal income tax return. But you may not have to report that income if the rental period is short.

In most cases, you can deduct expenses of renting your property. Your deduction may be limited if you also use the home as a residence.

Here are some tips from the IRS about this type of rental property.

  • You usually report rental income and deductible rental expenses on Schedule E, Supplemental Income and Loss.

    You may also be subject to paying Net Investment Income Tax on your rental income.
  • If you personally use your property and sometimes rent it to others, special rules apply. You must divide your expenses between the rental use and the personal use. The number of days used for each purpose determines how to divide your costs.

    Report deductible expenses for personal use on Schedule A, Itemized Deductions. These may include costs such as mortgage interest, property taxes and casualty losses.
  • If the property is “used as a home,” your rental expense deduction is limited. This means your deduction for rental expenses can’t be more than the rent you received. For more about this rule, see Publication 527, Residential Rental Property (Including Rental of Vacation Homes).
  • If the property is “used as a home” and you rent it out fewer than 15 days per year, you do not have to report the rental income.
I can endorse the opening up of the government for civil liability for taxpayer abuse. ... the Office of Taxpayer Advocate, that backers say will eventually mean better ... Such oversight is necessary if we are to make the IRS more efficient.

Please let me know if you need any clarification. I'm always happy to answer your questions.
Jul 17th, 2015

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