Author Question: Hoyt rented office space two years ago to Harris, receiving the first and last months' rent plus a ... (Read 40 times)

fox · **on:** Sep 13, 2020

Question 1

Homer Corporation's office building was destroyed by fire. Homer collected insurance of $250,000, which equaled the building's basis, and $150,000 for profits lost during the time the company was rebuilding the office building. What is the amount taxable this year?
◦ $0
◦ $150,000
◦ $250,000
◦ $400,000

Question 2

Hoyt rented office space two years ago to Harris, receiving the first and last months' rent plus a security deposit of $1,000. In early January of this year, Harris moves and Hoyt refunds $250 of the deposit and keeps the remainder to cover $500 which is spent for repairs to the office space and one week of unpaid rent that amounts to $250. How would this information be reflected on Hoyt's tax return this year?
◦ $750 income and $500 deduction
◦ $750 income and no deduction
◦ $250 income and $500 deduction
◦ No income is recognized, but a $250 deduction is allowed.

mohan · **Reply #1 on:** Sep 13, 2020

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