What happens when taxpayer experiences a net loss

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Reference no: EM13132534

1) What happens when a taxpayer experiences a net loss from a rental home?

A. The loss is fully deductible against the taxpayer's ordinary income, no matter the circumstances.

B. If the taxpayer is not an active participant in the rental, the taxpayer may be allowed to deduct the loss even if the taxpayer does not have any sources of passive income.

C. The taxpayer will not be allowed to deduct the loss under any circumstance if the taxpayer does not have passive income from other sources.

D. If the taxpayer is not allowed to deduct the loss due to the passive activity limitations, the loss is suspended and carried forward until the taxpayer generates passive income or until the taxpayer sells the property.

2) What is the tax impact to a taxable corporation or an S corporation when it makes a property distribution to a shareholder?

Reference no: EM13132534

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