Question

Michelle is an active participant in the rental condominium property she owns. During the year, the property generates a ($23,500) loss; however, Michelle has sufficient tax basis and at-risk amounts to absorb the loss. If Michelle has $132,000 of salary, $11,700 of long-term capital gains, $4,700 of dividends, and no additional sources of income or deductions, how much loss can Michelle deduct?

Answer 1

loss that Michelle can deduct is $700.

Step-by-step explanation:

total income of Michelle = $132,000 + $11,700 + $4,700

= $148400

phased out amount = ($148400 - $100000)*0.5

= $24200

Michelle loss = $23500 - $24200

= $700

Therefore, loss that Michelle can deduct is $700.