1. Philip is a single taxpayer with modified AGI of $135,000 and an active participation rental real estate loss of $30,000. Assuming he has no other source of passive income, what is his adjusted special loss allowance?
1. $0 2.
2. $5,000
3. $7,500
4. $25,000
3. Generally, when a taxpayer disposes of their entire interest in a passive activity where all gain or loss is recognized, any prior year unallowed passive activity losses are:
1. Included with current-year passive activity gain or loss and allowed in full.
2. Deducted against ordinary income up to $3,000 and carried forward until depleted.
3. Permanently disallowed.
4. Carried forward to offset any future passive activity gains.