Question

Carey, a single taxpayer, purchased a rental house in 2019, which he actively manages. During 2019, Carey had a loss of $14,000 from the rental house. If Carey's adjusted gross income for 2019 is $138,000 before the rental loss, what is the amount of Carey's allowable deduction for the rental activity for 2019? a. $6,000 b. $12,000 c. $0 d. $3,000 e. None of these choices are correct.

Answer 1

False, If a residence is primarily used as a rental, the expenses must still be ... In some cases, a taxpayer may deduct an otherwise allowable contribution to an ... He has a loss of $15,000 on rental property he actively manages. ... If Carey's adjusted gross income for 2014 is $144,000 before the rental loss, ...

Answer 2

The amount of Carey's allowable deduction for rental house activities for 2019 is $6,000. The right answer is a

Step-by-step explanation:

In order to Calculate the amount of Carey's allowable deduction for rental house activities for 2019.

Individual taxpayers deduct rental property of $25,000 losses against other income, hence Loss deduction = $ 25,000 - (50% of the tax payer's modified total income in excess of $100,000)

To calculate the total income in excess of $ 100,000 we have to make the following calculation:

Total income in excess of $100,000 = $ 138,000 - $ 100,000 = $ 38,000.

Therefore, loss deduction = $ 25,000 - (50% of 38,000)

= $ 6,000

The amount of Carey's allowable deduction for rental house activities for 2019 is $6,000