Nelson is the owner of an apartment complex. He actively participates in the management of the building. During the current year, it generates a taxable loss of $33,000. Nelson's other sources of income are salary of $148,000 and interest of $12,000. What is Nelson's allowable loss from the apartment?
A)$- 0 -
B)$ 1,000
C)$12,000
D)$25,000
E)$33,000.

Question

Quizplus · Accepted Answer

The allowable loss from a passive activity is limited to the amount of passive income. Nelson's only passive income is the $12,000 of interest, so his allowable loss from the apartment is $12,000.

Nelson Is the Owner of an Apartment Complex