Lucy owns and actively participates in the operations of an apartment complex that produces a $50,000 loss during the year. Her modified AGI is $125,000 from an active business. Disregarding any at-risk amount limitation, she may deduct $25,000 of the loss, and the remaining $25,000 is a suspended passive activity loss.

Question

Quizplus · Accepted Answer

Lucy actively participates in the operations, so the loss is not considered a passive activity loss. She can deduct the full $50,000 loss against her active income, subject to any other applicable limitations.

Lucy Owns and Actively Participates in the Operations of an Apartment