Question

Shanna, a calendar year and cash basis taxpayer, rents property from Janice. As part of the rental agreement, Shanna pays $24,200 rent on April 1, 2018 for the 12 months ending March 31, 2019.
a. Shanna's deduction for rent expense in 2018 is $.
b. Assume the same facts, except that the $24,200 is for 24 months' rent ending March 31, 2020. Shanna's deduction for rent expense in 2018 is

Answer 1

Answer and Explanation:

Given:

Rental Payment during the year = $24,200

Period = 12 months (from 1st April to 31st March)  

A. The total amount of $24,200 is deductible during the year because the total amount was pay in a single taxable year.

B. The amount deductible during the year is $9,075.

Only a 9-month payment will be considered as the deductible amount.

Computation:

$24,200 (9 month / 24 month)

$9,075