James is the sole owner of several parcels of rental real estate, and he activel

Question

James is the sole owner of several parcels of rental real estate, and he actively participates in managing the properties. His total net loss from these activities in 2017 was $35,000 and his modified adjusted gross income for 2017 was $110,000. How much, if any, is the allowable deduction for 2017 for the loss from these properties?a, 0. b . $10,000.c. $20,000.d. $25,000.

My answer is (d) 25,000 max. loss and 10,000 would be carried forward, according to passive activity rules for actively participating. Am I on the right track?

Explanation / Answer

Yes, it's correct

As he is actively participate in managing the properties and therefore 35000 is an active loss.

Active loss is to deducted from the active income and therefore 35000 should be deducted from 110,000 but as it is not in the given option we will go for next maximum amount.

And remaining 10000 of active loss should be carried forward.

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