Question

Shanna, a calendar year and cash basis taxpayer, rents property to be used in her business from Janice. As part of the rental agreement, Shanna pays $8,400 rent on April 1, 2019, for the 12 months ending March 31, 2020. How much is Shanna’s deduction for rent expense in 2019? Assume the same facts, except that the $8,400 is for 24 months’ rent ending March 31, 2021. How much is Shanna’s deduction for rent expense in 2019?

Answer 1

}{y}[/tex]Answer:

For part A) The entire 2019 is deductible.

For part B) $9,075

Explanation:

FOR PARTE A) we know the equation is:

$\frac{24,200}{y} number of months$ where y is 12 (which means the entire year) and the number of months will be also 12. So the equation will be:

$\frac{24,200}{12} 12$ and the answer will be 24,200 which means the entire year is deductible.

FOR B) the equation to be used  will be replaced by 24 (two years) and the number of month will be 9.

so the equation is:

$\frac{24,200}{24} 9$

the answer wil be $9,075