Noah Yobs, who has $98,200 of AGI (solely from wages) before considering rental activities, has $88,380...

Noah Yobs, who has $98,200 of AGI (solely from wages) before considering rental activities, has $88,380 of losses from a real estate rental activity in which he actively participates. He also actively participates in another real estate rental activity from which he has $49,100 of income. He has other passive activity income of $31,424.

a. What amount of rental loss can Noah use to offset active or portfolio income in the current year?
$

b. Compute Noah’s AGI on Form 1040 [pages 1 and 2; also complete Schedule 1 (Form 1040)] for the current year. Use the minus sign to indicate a loss.

Expert Solution

a) As per the IRS rules related to a passive acitivity, if a loss is incurred from Real estate rent it is considered to be a loss on passive activity and any losses from a passive activity needs to be allowed to settle off from income from passive activity.

If any loss is left out to be settled, even after disposing off the passive losses against passive income. Then the left out loss can be settled off against any other income

Calcualtion of deductable loss of Noah :-		Amount
Income from Passive activities		$31,424
Income from real estate rental activity	$49,100
losses from real estate rental activity	($88,380)
Net losses from real estate rental activity		($39280)
Loss deductible		($7,856)

b) Form 1040 (page1) requires the following personal information which is not given in the question

Filing status - Single /Married filing jointly/Married filing seperately/Head of Household/ Qualifying widower

Personal information - Name & Social Security number

Spouse & social security number (in case of joint return)

Home address

Other Information - Standard deduction / Age/Blindness / Details of dependents

Form 1040 (Page 2), it is the page where all finance related information can be updated, Considering the limited information available in the question, we have tried to fill in the relevant sections on page 2 of Form 1040 and schedule 1

Schedule 1

ekkarill92 answered 1 year ago

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