Josie, an Unmarried Taxpayer, Has $155,000 in Salary, $10,000 in Income

question 109

Multiple Choice

Josie, an unmarried taxpayer, has $155,000 in salary, $10,000 in income from a limited partnership, and a $26,000 passive activity loss from a real estate rental activity in which she actively participates. If her modified adjusted gross income is $155,000, how much of the $26,000 loss is deductible?

• A) $0
• B) $10,000
• C) $25,000
• D) $26,000
• E) None of the above

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Definitions:

Person's Judgment

The capacity or ability of an individual to make considered decisions or come to sensible conclusions.

Bound in Contract

A legal state or condition wherein parties are legally obligated to fulfill the terms and conditions stipulated in a contract.

Non Est Factum

A legal defense in contract law where a person claims that a signature on a contract was signed by mistake, without understanding its nature.

Functionally Illiterate

Describes an individual whose reading and writing skills are inadequate to manage daily living and employment tasks that require literacy.