For tax purposes, landlords include all rental income received in their gross income. In Jesse's case, he received a total of $2,000 in advance rent, which comprises the first month's rent of $1,000 and the last month's rent of $1,000, plus an additional $10,000 in rent during the remainder of the tax year.
Here’s the calculation of Jesse's gross rental income:
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Advance rent received:
- First month's rent: $1,000
- Last month's rent (which is also included in the current year): $1,000
- Total advance rent: $2,000
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Rent received during the year: $10,000
Now, adding these amounts together:
- Total rental income = Advance rent ($2,000) + Rent during the year ($10,000) = $12,000
Therefore, Jesse would include $12,000 in gross rental income on his 2023 tax return.