Question

The rental real estate exception favors:

A) lower income taxpayers (AGI less than $80,000).
B) middle income taxpayers (AGI greater than $80,000 and less than $150,000).
C) upper income taxpayers (AGI greater than $150,000).
D) lower income taxpayers (AGI less than $80,000) and middle income taxpayers (AGI greater than $80,000 and less than $150,000).
E) middle income taxpayers (AGI greater than $80,000 and less than $150,000) and upper income taxpayers (AGI greater than $150,000).

Answer 1

The rental real estate exception favors middle-income taxpayers (AGI greater than $80,000 and less than $150,000) and upper-income taxpayers (AGI greater than $150,000).

Step-by-step explanation:

The rental real estate exception favors middle-income taxpayers (AGI greater than $80,000 and less than $150,000) and upper-income taxpayers (AGI greater than $150,000).

The rental real estate exception allows taxpayers who actively participate in rental real estate activities to deduct up to $25,000 in losses against their non-passive income.

However, this exception is subject to a phase-out for taxpayers with modified adjusted gross income (MAGI) above $100,000 for married taxpayers filing jointly or $50,000 for other taxpayers. Taxpayers with MAGI above $150,000 cannot claim the rental real estate exception.

Therefore, the exception primarily benefits middle-income and upper-income taxpayers.