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Taxable Rental Income for a Cash-Basis Taxpayer

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1. John Smith, as the owner of an apartment building, receives and makes the following payments during 2008.

Received in Jan 2008 rent that was due in Dec 2007.... $5,000

Received in Dec 2008 rent not due until Jan 2009.... $4,000

Security deposit which is to be refunded when tenant vacates the apartment... $500

How much rental income must John Smith include on his 2008 income tax return?

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Solution Summary

This solution discusses the taxability of rental receipts and security deposits.

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$9,000 in payments are includible in income in 2008. Because John is an individual, he reports on the cash basis (i.e., he ...

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