Harvey rents his second home. During the year, Harvey reported a net loss of $46,000 from the rental. If Harvey is an active participant in the rental and his AGI is $82,400, how much of the loss can he deduct against ordinary income for the year?

Question

Quizplus · Accepted Answer

If Harvey is an active participant in the rental and his AGI is less than $100,000, he can deduct up to $25,000 of rental losses against his ordinary income. However, the amount of the deduction phases out as AGI exceeds $100,000 and is completely eliminated once AGI reaches $150,000. Since Harvey's AGI is $82,400 and he reported a net loss of $46,000 from the rental, he can deduct up to $25,000 of the loss against his ordinary income for the year. Therefore, the answer is B.

Harvey Rents His Second Home