Passive Activity Loss Scenario – Single
Example:
Filing Status: Single
MAGI: 120,000
Rental Real Estate Loss: 31,000
Active Participant: Yes
Real Estate Professional? No
Current Year Deduction (See Calculation Below): 15,000
Carryforward Deduction: 16,000
Calculation:
MAGI: 100,000
Phaseout: 20,000 (MAGI – 100,000)
Multiply Phaseout by 50%: 10,000 (20,000 * 50%)
Maximum Special Allowance: 25,000 (Given)
Minus Required Deduction: (10,000)
Adjusted Special Allowance: 15,000
Rental Real Estate Loss: 31,000 (Example above)
Deduction Allowable: (15,000) (From Adjusted Special Allowance above)
Carried Forward: 16,000 (31,000-15,000)
Source: https://www.irs.gov/publications/p925
Disclosure: This is general information. Do not rely upon this for tax planning or tax preparation. Consult your personal tax professional for your personal situation.
If you would like us to look at your personal situation and provide specific tax recommendations, please contact us at: info@wandercpa.com or 310-894-3211.
Thank you.
Michael Wander