Nancy is the owner of an apartment complex. She actively participates in the management of the building. During the current year, it generates a taxable loss of $27,000. Nancy's other sources of income are salary of $52,000 and interest of $21,000. What is Nancy's allowable loss from the apartment?
A)$- 0 -
B)$18,000
C)$25,000
D)$27,000
E)None of the above.

Question

Quizplus · Accepted Answer

The allowable loss from the apartment is limited to the amount of Nancy's other income, minus $25,000, which is the maximum amount of losses that can be deducted in a year for a taxpayer that actively participates in the management of the rental property. So, Nancy's allowable loss is $73,000 - $25,000 = $48,000. However, since the actual loss from the apartment is only $27,000, she can only deduct $27,000, which is option C.

Nancy Is the Owner of an Apartment Complex