In the current year, Kelly had a $35,000 loss from a real estate rental activity in which she is a 10% owner. If she is an active participant and if her modified AGI is $100,000, she can deduct $25,000 of the loss.

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According to the IRS rules, an active participant in a real estate rental activity with a modified AGI of less than $100,000 can deduct up to $25,000 of the loss. As Kelly is an active participant and her modified AGI is $100,000, she can still deduct $25,000 of the $35,000 loss.

In the Current Year, Kelly Had a $35,000 Loss from a Real