In 2016,Glenn recorded a $108,000 loss on a passive activity.None of the loss is attributable to AMT adjustments or preferences.She has no other passive activities.Which of the following statements is correct?
A)In 2016,Glenn can deduct $108,000 for regular income tax purposes and for AMT purposes.
B)Glenn reports a $108,000 tax preference in 2016 as a result of the passive activity.
C)For regular income tax purposes,none of the passive activity loss is allowed in 2016.
D)In 2016,Glenn reports a positive adjustment of $25,000 as a result of the passive activity loss.
E)None of the above.

Question

Quizplus · Accepted Answer

For regular income tax purposes, none of the passive activity loss is allowed in 2016 since the loss is not offset by any passive activity income. The loss can only be carried forward to offset any future passive activity income or be used in the year in which the passive activity is disposed of. There is no impact on AMT since the loss is not attributable to AMT adjustments or preferences. Therefore, options A, B, D, and E are incorrect.

In 2016,Glenn Recorded a $108,000 Loss on a Passive Activity