Question

1. Ryan Taxpayer has two rentals, A & B.  Rental A has a loss of $30,000, rental B has a loss of $20,000.  Ryan is single and has AGI of $110,000.  What are the allowable losses by property and the suspended losses by property?

Would your answer change for California?  How?

What is the Ryan’s AGI?

Would your answer change if Ryan was married and filing a joint return. How?

Would your answer change in number 1 if Ryan was a real estate professional (federal)? California? How?

Answer 1

“suspended loss by property ” with passive activities like rental property, the taxpayer losses are allowed till extend they qualify under 469(i) under 26 US code. the tax payer's excess losses are suspended only when the taxpayer has any passive income to offset or they sell the rental property which is of $25000.

For California, the answer remains the same because the same rule is applicable to all states in the same way as they are in other states.

As Ryan's AGI is given 110000 so he is not eligible for any deductions as his income is more than 1,00,000$.

The formula to calculate AGI is

1)Add all income like capital gains, wages, dividends, income on investments, royalties, rental income, etc.

2)subtract all deductions for which the taxpayer is eligible.ex.tution fees, health insurance premiums.

like single filers are eligible for $6350 deductions

married fillers 12,700.

For married filers, if MAGI if modified annual general income is more than 150000$ then they not eligible for a standard deduction of 25000$ on gross income

There are exceptions for passive loss rules as if any taxpayer classify as the real estate professional than they are eligible to qualify any amount of deduction in the form of losses from their passive incomes.