Michelle is an active participant in the rental condominium property she owns. During the year, the property generates a ($15,000) loss; however, Michelle has sufficient tax basis and at-risk amounts to absorb the loss. If Michelle has $115,000 of salary, $10,000 of long-term capital gains, $3,000 of dividends, and no additional sources of income or deductions, how much loss can Michelle deduct?
A) $11,000
B) Zero; losses from rental property are passive losses and can only be offset by passive income
C) $4,000
D) $15,000
E) None of the choices are correct.

Question

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The Answer of Michelle is an active participant in the rental condominium property she owns. During the year, the property generates a ($15,000) loss; however, Michelle has sufficient tax basis and at-risk amounts to absorb the loss. If Michelle has $115,000 of salary, $10,000 of long-term capital gains, $3,000 of dividends, and no additional sources of income or deductions, how much loss can Michelle deduct?
A) $11,000
B) Zero; losses from rental property are passive losses and can only be offset by passive income
C) $4,000
D) $15,000
E) None of the choices are correct.

Michelle Is an Active Participant in the Rental Condominium Property