In the current year,Abby has AGI of $95,000 and a $40,000 loss from a real estate rental activity in which she is a 15% owner.If she is an active participant,she can deduct $25,000 of the loss.

Question

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According to the IRS rules, if the taxpayer actively participates in the rental activity (which is the case for Abby), they can deduct up to $25,000 of rental losses per year, provided their AGI is less than $100,000. Since Abby's AGI is $95,000 and she is an active participant, she can deduct $25,000 of the $40,000 rental loss. Therefore, the statement is true, and the answer is A.

In the Current Year,Abby Has AGI of $95,000 and a $40,000