question archive The following information applies to a taxpayer who owns two rental properties, Property A and Property B, and has no other involvement in passive activities: 1 Year : Property A loss -14000, B income 5000 2 Year: Property A loss -9000, B income 3000 3Year: Property A loss 0, B income 0 The taxpayer does not meet the requirements for the rental real estate exceptions
The following information applies to a taxpayer who owns two rental properties, Property A and Property B, and has no other involvement in passive activities: 1 Year : Property A loss -14000, B income 5000 2 Year: Property A loss -9000, B income 3000 3Year: Property A loss 0, B income 0 The taxpayer does not meet the requirements for the rental real estate exceptions
Subject:AccountingPrice:2.86 Bought6
The following information applies to a taxpayer who owns two rental properties, Property A and Property B, and has no other involvement in passive activities:
1 Year : Property A loss -14000, B income 5000
2 Year: Property A loss -9000, B income 3000
3Year: Property A loss 0, B income 0
The taxpayer does not meet the requirements for the rental real estate exceptions. In year 3, Property A is sold to an unrelated party for an $8,000 gain. Other income for year 3 includes $4,000 interest income and $12,000 wages. What is the taxpayer's AGI for year 3?
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Losses from property A can be offset by income or gains from property B. All are related rental properties.
Net losses carried forward to year 3 on property A=14,000+9,000-(5000+3,000)
=$15,000
The gain on property A are offset by losses carried forward on the property.
Net losses =losses carried forward-gain on property A
=15,000-8,000
=$7,000
If the rental real estate exceptions are not met , only $3,000 of the excess $7,000 net capital(rental) losses would be deductible against the ordinary income.The remaining losses are carried forward to future years.
Deductible losses=limited to $3,000
Taxpayers AGI=interest income +wages-deductible losses
=4,000+12,000-3,000
=$13,000
