Indicate the proper treatment in the current year for the underlined amounts. Treat each item as an independent event. Indicate whether the amount is deductible or not; if deductible whether it is deductible FOR or FROM AGI; and indicate the amount of the deduction for the current year considering any relevant limitations. Assume the taxpayer has deductions greater than the standard deduction, has AGI of $69,000 without regard to the following transactions and has no "total" income limitations related to itemized deductions.
-Taxpayer's only passive activity is a rental activity that results in a loss of $8,000. Amount: $8,000, since AGI is less than $100,000
A)Not Deductible
B)Deductible - For AGI
C)Deductible - From AGI

Question

Quizplus · Accepted Answer

The rental activity loss is deductible for AGI as it is considered an active participation by the taxpayer. The limitation of $25,000 on passive activity losses does not apply as the taxpayer's AGI is less than $100,000.

Indicate the Proper Treatment in the Current Year for the Underlined