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Nicole's AGI is $135,000 before considering her rental property. During the year, Nicole had a rental...

Nicole's AGI is $135,000 before considering her rental property. During the year, Nicole had a rental loss of $11,000. What is Nicole's AGI after considering the rental loss?

A. $127,500.

B. $124,000.

C. $135,000.

D. $117,500.

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Answer #1

The allowable deduction is $25,000 is AGI is $100,000 or less.

It gets reduced by 50% of every dollar earned after $100,000.

The deduction is available only if AGi is below $150,000

Allowable deduction = $25,000 - ($35,000 * 50%)

Allowable deduction = $25,000 - $17,500

Allowable deduction = $7,500

Nicole's AGI after considering rental loss = $135,000 - $7,500

Nicole's AGI after considering rental loss = $127,500

Hence, the correct answer is A. $127,500

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