Ilene rents a property for the entire year. During the year, Ilene reported a net loss of $10,400 from the rental. If Ilene is an active participant in the rental and her AGI is $130,000, how much of the loss can she deduct against ordinary income in the year?

Question

Quizplus · Accepted Answer

If Ilene is an active participant in the rental, has an AGI of less than $150,000, and she reported a loss from the rental activity, then she can deduct up to $25,000 of the loss against ordinary income. However, the amount of the deduction is phased out by 50% of the amount that her AGI exceeds $100,000. Since Ilene's AGI of $130,000 exceeds $100,000 by $30,000, the amount of her deduction is reduced by $15,000 (50% of $30,000). Therefore, her maximum allowable deduction is $10,000 ($25,000 - $15,000).

Ilene Rents a Property for the Entire Year