Arnold purchased two rental properties 6 years ago. He actively participates in their management. During 2015, Arnold had income of $22,000 from one of the rentals. He had a loss from the other rental of $32,000, as well as salary income of $35,000, and dividend income of $2,000. What is Arnold's net passive income or loss deduction?

Question

Quizplus · Accepted Answer

Arnold can offset the $22,000 rental income with the $32,000 rental loss, resulting in a $10,000 net loss. Since he actively participates, he can deduct up to $25,000 of rental losses against other income, so the $10,000 loss is deductible.

Arnold Purchased Two Rental Properties 6 Years Ago