H owns an apartment complex of 30 units. One of his tenants manages the property

Question

H owns an apartment complex of 30 units. One of his tenants manages the property in exchange for use of an apartment rent free. H makes all of the major decisions regarding the units and is in regular contact with his manager. This year, the complex generated a loss of $35,000. Assuming H’s A.G.I. is $120,000, H may deduct a. none of the loss. b. $25,000 and carryover $10,000 of the loss. c. $15,000 and carryover $20,000 of the loss. d. $15,000 and carryover $10,000 of the loss. e. none of the above.

Explanation / Answer

b. $25,000 and carryover $10,000 of the loss A rental activity is a active activity, H can deduct only $25,000 of his activee activity loss. He must carry over the remaining $10,000 activity loss to 2018

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