Analysis: Passive Activity Gains And Losses

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Register to read the introduction… Rental activities are also considered passive unless the taxpayer is a real estate professional. Losses from passive activities can only be offset by income from passive activities (IRS Pub 527). In this case, the couple’s rental income of $23,000 completely covers the expenses of$29,200. There is also the $44,000 passive gain for the sale of the rental property. After calculating the basis by taking into account the selling and purchase costs, improvements, accumulated depreciation and rent received for the period, there may be an offset for the $6,200 passive loss of the rental income producing a passive activity gain of …show more content…
As long as the donations were made to qualified domestic organization, Section 170 allows deductions for up to 50% of AGI depending on the type of property given. For example, the deduction for capital gain property is limited to 30% of AGI.
Health Insurance premiums paid. In this case, no deduction is likely if Spouse B’s employer does not include the premiums paid in the employee’s gross income. Spouse A may not deduct self-employment health premiums because there is an available subsidized health plan through Spouse B’s employer.
Medical Expenses $0 deduction. Medical expenses net $16,300 ($45,000 total - $28,700 reimbursement). The medical deduction is limited to the excess over 10% of AGI for 2013 which for this couple is $21,060 ($210,600 AGI*.10) $16,300- $21,060 = ($4,760) .
Moving expenses $0 deduction. Spouse B’s new job is only 49 miles further from the old residence and does not meet the 50 mile requirement therefore, no allowance can be made for the moving expenses in this instance.
Business suits $0 deduction. Spouse B spent approximately $2,600 on business suits for the new job. However, this is not deductible as the suits are appropriate for everyday wear and can be used for purposes other than business
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(n.d.). Retrieved 2 8, 2014, from IRS.gov: http://www.irs.gov/uac/American-Opportunity-Tax-Credit
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