Pablo, Who Is Single, Has $95,000 of Salary, $10,000 of Income

question 98

Multiple Choice

Pablo, who is single, has $95,000 of salary, $10,000 of income from a limited partnership, and a $27,000 passive activity loss from a real estate rental activity in which he actively participates. His modified adjusted gross income is $95,000. Of the $27,000 loss, how much is deductible?

• A) $0
• B) $10,000
• C) $25,000
• D) $27,000
• E) None of the above

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Definitions:

Personal Income Taxes

Taxes imposed on individuals' income by the government, including wages, salaries, and investment earnings.

Federal Tax Revenues

The income earned by the government through all types of taxes, including income, payroll, and excise taxes, used to fund public services and operations.

Tax Freedom Day

A symbolic day representing when a nation's taxpayers have collectively earned enough income to pay the year's total tax bill.

Marginal Tax Rate

The rate at which an additional dollar of income is taxed, reflecting the percentage of each additional dollar that is paid in tax.