Question

Walter, a single taxpayer, purchased a limited partnership interest in a tax shelter in 1991. He also acquired a rental house in 2017, which he actively manages. During 2017, Walter's share of the partnership's losses was $16,000, and his rental house generated $33,500 in losses. Walter's modified adjusted gross income before passive losses is $114,000. If an amount is zero, enter "0". a. Calculate the amount of Walter's allowable deduction for rental house activities for 2017. $ Feedback b. Calculate the amount of Walter's allowable deduction for the partnership losses for 2017. $

Answer 1

Part A

the amount of Walter's allowable deduction for rental house activities for 2017 = $18000

Explanation :

Modified AGI = 114000

So, 14000 are in excess over 100000

Maximum rental loss allowed = 25000

Now, this $25,000 is reduced by 50 cents for each dollar the tax payers modified adjusted gross income exceeds $100,000. No deduction is allowed if the modified adjusted gross income exceeds $150,000.

Therefore, amount of Walter's allowable deduction for rental house activities for 2017 = 25000-(50%*14000) = 25000-7000 = 18000

Part B

the amount of Walter's allowable deduction for the partnership losses for 2017 = $0