Question

Joseph has AGI of $170,000 before considering the $20,000 rental loss for property which he actively manages. How much of the rental loss can he deduct?

A) $10,000
B) $0
C) $25,000
D) $20,000

Answer 1

Joseph can deduct $10,000 of the rental loss.

Step-by-step explanation:

Joseph can deduct $10,000 of the rental loss. The deduction for rental losses is subject to certain limitations. If the taxpayer actively participates in managing the rental property and has an adjusted gross income (AGI) of less than $100,000, they can deduct up to $25,000 in rental losses. However, the deduction gradually phases out when the AGI is between $100,000 and $150,000.