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Ron Jones has a $20,000 loss from a business that he does not materially participate in....

Ron Jones has a $20,000 loss from a business that he does not materially participate in. He also has interest income of $30,000. In addition, he has income of $8,000 from a rental activity that he is actively involved in and income of $9,000 from a limited partnership. Based on all of these sources, what is the increase in his taxable income for the year?

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Answer #1

Ans: Taxable income for the year:

Interest income= 30,000

Income from rental property= $8,000

Income from limited partnership= $9,000

Loss= $20,000

Increase in taxable income= $30,000+$8,000+$9,000-$20,000

=$27,000

here the concept used is of passive income:it defines that earnings from rental property, a business or limited partnership,in which a person is not fully active or participative and its taxable.

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