[Ital99]

I got this question in my REG MCQ’s. The answer indicates I got it wrong because i chose “D” $30,000 instead of “B” $15,000 (the correct answer). I thought that a married couple filing jointly (like in the question) was allowed $50,000 rental loss deduction and not $25,000 (single individual). I still think the correct answer is “D” based on the question.

Any comments? Thanks.

REG MCQ:

The Jacksons, who file a joint return, actively participate in a solely-owned rental real estate activity that produces a $30,000 loss during the current year. Their adjusted gross income was $120,000 before considering the rental activity. How much of the rental loss, if any, are the Jacksons entitled to deduct?

A.

$0

B.

$15,000 Correct

C.

$25,000

Incorrect D.

$30,000

[kayfcpa16]

Where did you get $50,000 loss deduction amount from?

I thought Active Participation Rental Loss limit was $25,000 (MFJ), $12,500 (Single/MFS).

There is a mAGI phaseout ..

If modified adjusted gross income (MAGI) is $100,000 or less ($50,000 or less if married filing separately), you can deduct loss up to $25,000/$12,500. MAGI of more than $100,000 (more than $50,000 if married filing separately), special allowance is limited to 50% of the difference between $150,000 ($75,000 if married filing separately) and MAGI.
Generally, if MAGI is $150,000 or more ($75,000 or more if married filing separately), there is no special allowance.

150,000 – 120,000 (AGI) = 30,000 (Difference) / 50% = $15,000 loss deduction allowed.

May the force be with you .

BEC - 78 (2/16)

FAR - 78 (2/16)

AUD - 69 (8/16), 75 (10/16)

REG - 65 (8/16), 65!! (10/16) - Just Shoot Me [Re - Retake (1/17) 75!] ..

DONEEEEEEEE

 

FAR - 2/16 - 78
BEC - 2/16 - 78
AUD - 8/16
REG - 8/16

[Ital99]

kfalicity thanks for the detail reply. After reading your response I think I was confusing the max loss deduction with the MAGI for married filing separately. Now I understand it. Thank you!!!!
I'm taking the test this Saturday and I'm going bonkers with Taxation.

[kayfcpa16]

No problem, there is a lot of information in REG, just take your time and continue to practice questions
Hope you do well on your upcoming exam!

May the force be with you .

BEC - 78 (2/16)

FAR - 78 (2/16)

AUD - 69 (8/16), 75 (10/16)

REG - 65 (8/16), 65!! (10/16) - Just Shoot Me [Re - Retake (1/17) 75!] ..

DONEEEEEEEE

 

FAR - 2/16 - 78
BEC - 2/16 - 78
AUD - 8/16
REG - 8/16

[Ital99]

Thank you.
The best of luck to you too!!

[Spartans92]

OP, what chapter is this?
I should start reviewing exam is in 2 weeks.. totally forgot all these phaseout limit. Thanks.

BEC - 76
REG- 67, 85
AUD-63, 74, 80!!
FAR-65, 62, 57, 79

3 down 1 more to go. BEC is on the Line 🙁

BEC- PASS

[Author]

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