Helen, a single taxpayer, has modified adjusted gross income (before passive losses) of $126,000. During the tax year, Helen's rental house generated a loss of $15,000. Assuming Helen is actively involved in the management of the property, what is the amount of Helen's passive loss deduction from the rental house?

Question

Tyrese Clarke

Business

5 September, 00:01

Helen, a single taxpayer, has modified adjusted gross income (before passive losses) of $126,000. During the tax year, Helen's rental house generated a loss of $15,000. Assuming Helen is actively involved in the management of the property, what is the amount of Helen's passive loss deduction from the rental house?

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Answers (1)

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Jayleen Rangel · Answer 1

So Helen can only make a deduction of $12000 from the value.

Explanation:

The amount is given as

The maximum value of phase out allowance is $25000

The value of loss reduction is calculated for the value of MAGI greater than $100,000 which is $26000 in this case thus the solution is given as

$25000-50% * $26000

=$25000-0.5*$26000

=$25000-$13000

=$12000