Mark Has an Adjusted Gross Income of $154,000

question 117

Multiple Choice

Mark has an adjusted gross income of $154,000. Not included in his adjusted gross income is a $16,000 loss from a passive activity. Which of the following statements regarding the effect of the passive loss on his adjusted gross income is/are correct?
I.If the activity does not involve rental real estate, he can only deduct the loss as a miscellaneous itemized deduction.
II.If the activity is rental real estate and Mark is an active participant, he can deduct the $16,000 loss for adjusted gross income.
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• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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