Don owns a condominium near Orlando, California. This year, he incurs the following expenses in connection with his condo: Insurance$1,300Mortgage interest 10,000Property taxes 3,000Repairs and maintenance 900Utilities 2,200Depreciation 12,000 During the year, Don rented the condo for 70 days and he received $17,400 of rental receipts. He did not use the condo at all for personal purposes during the year. Don is considered to be an active participant in the property. Don's AGI from all sources other than the rental property is $140,000. Don does not have passive income from any other sources. What is Don's AGI?
What will be an ideal response?
$135,000
$140,000 + ($5,000)
Because Don is an active participant in the property, he is allowed to deduct ($5,000) of the passive loss this year [$25,000 active participant maximum less ($140,000 ? $100,000) × 0.5 (phase-out of AGI over $100,000 threshold)].
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