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AICPA CPA-Regulation Exam - Topic 1 Question 55 Discussion

Adams owns a second residence that is used for both personal and rental purposes. During 2001, Adams used the second residence for 50 days and rented the residence for 200 days. Which of the following statements is correct?
C) Utilities and maintenance on the property must be divided between personal and rental use.
A) Depreciation may not be deducted on the property under any circumstances.
B) A rental loss may be deducted if rental-related expenses exceed rental income.
D) All mortgage interest and taxes on the property will be deducted to determine the property's net income or loss.

AICPA CPA-Regulation Exam - Topic 1 Question 55 Discussion

Actual exam question for AICPA's CPA-Regulation exam
Question #: 55
Topic #: 1
[All CPA-Regulation Questions]

Adams owns a second residence that is used for both personal and rental purposes. During 2001, Adams used the second residence for 50 days and rented the residence for 200 days. Which of the following statements is correct?

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Suggested Answer: C

Choice 'c' is correct. Because the second property was personally used more than 14 days, any net loss from the rental of the property will be disallowed.

All related expenses must be prorated between the personal use portion and the rental activity portion.

Prorated depreciation is permitted for the rental activity.


by Anthony at Jul 21, 2026, 03:36 AM

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