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  3. 1. johnny, a cash basis taxpayer, owns two rental

1. Johnny, a cash basis taxpayer, owns two rental properties. Based on the following information,...

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Accounting

1. Johnny, a cash basis taxpayer, owns two rental properties. Based on the following information, compute the amount that he must include in his 2016 gross rental income.

Property #1, security deposit on one-year lease received 2/1/16. All of deposit returned at lease end $ 500
Property #1, payment received 2/1/16 for last month of lease (1/17) 700
Property #1, rental income received in 2016 2/15-12/15 7,700
Property #2, rental income received in 2016 1/15-12/15 9,000
Property #2, security deposit received 1/1/16 to be used for last month's rent 750
Property #2, rent 1/17 received 12/28/16 800

1)

$16,700

2)

$17,500

3)

$18,200

4)

$18,950

2. Percy Peterson received a grant from the Department of Education for a special research project on education. He received $500 per month for the period May 1 to December 31. Percy is not a candidate for a degree. The amount of the fellowship he may exclude from income for the tax year is:

1)

$0

2)

$1,600

3)

$2,400

4)

$3,000

5)

$4,000

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