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Depreciation for rental property in the Great Smokey Mountains

Mackenzie owns a condominium in the Great Smokey Mountains. During the year, Mackenzie uses the condo a total of 27 days. The condo is also rented to tourists for a total of 73 days and generates rental income of $8,900. Mackenzie incurs the following expenses in the condo:

Expense Amount
Mortgage interest $ 3,000
Property taxes 1,500
Utilities 2,500
Insurance 1,800
Depreciation 11,000
Using the Court method of allocating expenses, the amount of depreciation that Mackenzie may take with respect to the rental property will be:
a. $2,476.
b. $4,861.
c. $7,300.
d. $10,000

Solution Preview

The only answer that seems to work is a. $2476. If you take 73% of all ...

Solution Summary

The solution calculates the depreciation costs of a rental property owned by Mackenzie.