CAF-2 · Chapter 6 · Question 12 of 15
Which of the following is a mandatory condition that must be met to successfully claim a deduction for unpaid (bad) rent?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) C) The tenancy was bona fide, the tenant has vacated, and legal proceedings for recovery have been instituted or are deemed useless.
Explanation
To claim an allowance for unpaid rent, the tenancy must be bona fide, the defaulting tenant must have vacated (or steps taken to compel vacation), reasonable steps for legal recovery must have been initiated, and the unpaid rent must have been previously included in taxable income.
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