Which of the following rental situations is subject to taxable rental income?

The correct answer highlights a crucial aspect of the tax treatment of rental income related to the duration of rental and the income generated. Generally, for individuals renting out property, the IRS has specific rules around the taxation of rental income and exemptions based on the number of days the property is rented.

In the situation described, renting for 20 days for a total of $4,000 means that the rental income is being generated over an extended period. Unlike the scenarios where the property is rented for shorter durations – 10 days or two separate 7-day periods – the rental period here exceeds the typical threshold for tax exemption under the IRS guidelines.

When a property is rented for more than 14 days during the year, the rental income must usually be reported as taxable income. Since the 20 days surpasses this threshold, the entire rental income of $4,000 is subject to taxation.

In the other scenarios, renting for fewer than 15 days can often qualify for the primary residence exemption, which means the owner may not need to report that income. Thus, those situations result in non-taxable income and reinforce why the 20-day rental scenario stands out as subject to taxation.