17. John is an individual and is not a real estate professional and does not mat

Question

17. John is an individual and is not a real estate professional and does not materially participate in Partnership A or B. John is a limited partner in two real estate partnerships. Partnership A produces a passive loss of $3,000 (allocated to John). Partnership B produces passive income of $5,000 (allocated to John). How does John treat the income/(loss) on his tax return?

A. Include $2,000 net passive income in taxable income.

B. Recognize income of $5,000 and don’t deduct losses of $3,000.

C. Recognize no income or loss.

D. Deduct $3,000 loss but don’t recognize $5,000 income.

E. None of the above.

18. John is an individual and is a real estate professional and materially participates in Partnership A and B. John is a limited partner in two real estate partnerships. Partnership A produces a passive loss of $3,000 (allocated to John). Partnership B produces passive income of $5,000 (allocated to John). How does John treat the income/(loss) on his tax return?

A. Include $2,000 net passive income in taxable income.

B. Recognize income of $5,000 and don’t deduct losses of $3,000.

C. Recognize no income or loss.

D. Deduct $3,000 loss but don’t recognize $5,000 income.

E. None of the above.

Explanation / Answer

Answer to the first question that is Question 17 has been provided below as per Chegg policy .

QUESTION 17

Answer - PART : A

As John is a limited partner in real state partnership , the loss will we treated as passive loss only which is allowed to be set off from the passive income .

Hence the John will include $2000 net passive income in his tax return .

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