Nancy Has Active Modified Adjusted Gross Income Before Passive Losses

question 90

Multiple Choice

Nancy has active modified adjusted gross income before passive losses of $125,000. She has a loss of $15,000 on a rental property she actively manages. How much of the loss is she allowed to deduct against the $125,000 of other income?

• A)None
• B)$2,500
• C)$5,000
• D)$12,500

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Definitions:

Market Value

The current price at which an asset or a service can be bought or sold in an open market.

Investments

Assets purchased with the expectation that they will generate income in the future or appreciate in value for future resale.

Operating Cash Flow

The revenue generated by a company through its primary business functions.

Interest Expense

This is the cost incurred by an entity for borrowed funds, which can include the cost of bonds, loans, and lines of credit.