Aretha Has AGI of Less Than $100,000 and a 25

question 81

Essay

Aretha has AGI of less than $100,000 and a 25% marginal tax rate.During the year,she reports a $36,000 loss from Activity A and a $24,000 loss from Activity B.Additionally,Activity A generates $8,000 of tax credits.Both activities A and B are passive real estate rental activities in which Anita actively participates and owns over 10% of each activity.
a.How much loss can be recognized from each activity?
b.What is the amount of Aretha's suspended loss from each activity?
c.How much of the tax credits can be applied this year?

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Definitions:

Consumers

Individuals or groups that purchase goods or services for personal use and are the end-users in the supply chain.

Charitable Goods

Items donated to or produced by charitable organizations for the purpose of supporting their missions, often distributed to those in need or sold to raise funds.

Tax-exempt

Not subject to tax by federal or local authorities, often applicable to certain organizations, incomes, or properties.

Common

A term indicating something that is usual, typical, or shared among multiple entities.