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Business, 09.02.2022 19:00 Jasten

The local electric company requires a $200 refundable deposit from new customers in lieu of a credit check. Landlord Pete, a cash basis taxpayer, pays this amount for all his new-to-town tenants. When the tenant has paid the electric bill without delay, the electric company credits the deposit from the subsequent bill(s) until the entire amount is refunded. Pete allows the tenants to keep the credits on their utility account. The rent charged remains more or less at market value for the apartments. Thus, Pete is using the deposit as a way of attracting tenants. Required:
Can he deduct the $200 payments on his tax return?

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The local electric company requires a $200 refundable deposit from new customers in lieu of a credit...
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