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Ilene rents her second home. During the year, Ilene reported a net loss of $16,100 from...

Ilene rents her second home. During the year, Ilene reported a net loss of $16,100 from the rental. If Ilene is an active participant in the rental and her AGI is $138,000, how much of the loss can she deduct against ordinary income in the year?

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Answer is highlighted in yellow: Solution Answer: 6,000 Explanation: Rental house activity is a passive activity. Since, there is an active participation, therefore, following rule and deduction will be allowed: Passive loss can be offset against other Passive income If Passive Income is not sufficent than Lower of Remainning Passive loss or following: Maximum allowance allowed as per IRS Phaseout Starts from MAGI S100000 (138000-100000)50% Adjusted Special loss allowance or (Deduction against ordinary income) 6,000 a) b) $ 25,000 $ 19,000

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