Why are they using the maximum allowed amount when he only has 20k in losses? I answered A…
Anscomb is an employee who also solely owns and actively participates in a rental activity which produced a $20,000 loss in the current year. Anscomb’s W2 income in the current year is $115,000. Considering only the foregoing facts, what should Anscomb’s adjusted gross income be for the current year?
A.$102,500 [21%]
B.$107,500 [9%]
C.$115,000 [15%]
D.$97,500 [56%]
Explanation
Choices D (Correct) and A, B, C (Incorrect):
As an active participant, a taxpayer may deduct losses from rental activities up to a maximum amount of $25,000, with the maximum reduced by 50% of the taxpayer’s adjusted gross income (AGI) in excess of $100,000. Since Anscomb’s W-2 income is $115,000, the maximum Anscomb may deduct is $25,000 – ½ ($115,000 – $100,000), or $17,500. This would give Anscomb an AGI of $115,000 – $17,500, or $97,500.
BEC -
PASS
FAR - PASS
AUD - PASS
REG - PASS
BOOM! JUST LIKE THAT, I GOT MY LIFE BACK! =D
Using Becker self-study
FAR: (82) 175 hours - 1st attempt
BEC: (XX)
AUD: (69) 45hrs of study - 1st attempt
REG: (XX)
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