Answer:
Part(A):
Total expenses in connection with condo:
= 2000 + 6500 + 2000 + 1400 + 2500 + 14500
= $28,900
Assuming Alexa receives $20,000 inn gross rental receipts, she will incur losses = 20000 -28,900 = (8,900)
As Alexa's AGI from all sources other than the rental property($200,000) is higher than $150,000, she will not be able to deduct any amount of loss against her active income.
Therefore the loss is not deductible and rental activity has no effect on her AGI.
Part(B):
Assuming that Alexa’s AGI from other sources is $90,000.
Since her AGI is less $100,000, she will be able to deduct loss of $8,900
Therefore, rental activity loss will reduce Alexa's AGI to = 90,000 - 8.900 = 81,100
The rental activity loss will reduce her AGI by $8,900 and her AGI would be 81,100.
