During 2018, Pamela worked two "jobs." She performed financial consulting activities for 1,000 hours and real estate development and rental activities for 1,200 hours. Her real estate development and rental activities produced a loss of $35,000. Her financial consulting generated a net business income of $40,000. How much of the loss can Pamela deduct against her financial consulting income?

Question

Quizplus · Accepted Answer

Pamela can deduct the full $35,000 loss from her real estate development and rental activities against her financial consulting income. This is because the IRS allows losses from one business activity to offset income from another, assuming the taxpayer actively participates in the activities and meets other applicable requirements. Since Pamela worked significant hours in both her financial consulting and real estate activities, she can use the loss from the real estate activities to offset her consulting income, allowing her to deduct the full $35,000.

During 2018, Pamela Worked Two "Jobs