Smith has an adjusted gross income (AGI) of $120,000 without taking into consideration $(40,000) of losses from rental real estate activities. Smith actively participates in the rental real estate activities. What amount of the rental losses may Smith deduct in determining taxable income?

$15,000

Explanation:

For the purpose of loss relieve , allowance for losses made is considered in calculating the income tax for a period.

The maximum allowance for rental real estate activities on income tax returns for a year is $25,000 for modified annual gross income of not more than $100,000. However , for modified annual gross income within the range of $100,000 + 150,000, the allowance is limited to 50% of the difference between 150,000 and the Modified annual gross income , while a modified annual gross income of %150,000 and above attracts no special allowance.

Workings

For AGI as stated in the question , the allowance is $25,000

But if the income is a modified annual gross income ,Smith is only entitled to 150,000 - 100,000 * 50% = $15,000

lbc corporation makes and sells a product called product wz. each unit of product wz requires 4.1 hours of direct labor at the rate of $20.00 per direct labor-hour. management would like you to prepare a direct labor budget for june. the company plans to sell 28,000 units of product wz in june. the finished goods inventories o

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