Final answer:
The minimum level of participation required to deduct rental losses against other income is active participation.
Step-by-step explanation:
The minimum level of participation required in order for a taxpayer to be able to deduct up to $25,000 in rental losses against other types of income is (b) Active participation. Active participation means that the taxpayer must have a significant and bona fide involvement in the rental activity. This can include making management decisions or arranging for others to provide services related to the rental property.
For example, if a taxpayer actively manages a rental property by advertising for tenants, collecting rent, and overseeing maintenance and repairs, they would meet the active participation requirement.
It's important to note that active participation is less stringent than material participation, which requires a higher level of involvement in the rental activity.