Question

Mandy, who has AGI of $80,000 before considering rental activities, is active in three separate real estate rental activities. Mandy has a marginal tax rate of 22%. She has $12,000 of losses from Activity A, $18,000 of losses from Activity B, and income of $10,000 from Activity C. She also has $2,100 of tax credits from Activity A. Calculate her deductions and credits allowed and the suspended losses and credits.

Answer 1

Answer: See explanation

Explanation:

Mandy's deductions and credits allowed and the suspended losses and credits are calculated as follows:

Mandy's deduction (her utilized loss) total = $12000 + $18000 - $10000 = $20000

Her suspended loss = $0

After deducting the loss, Mandy has available a deduction equivalent of = $5000

Hee utilized credit is ($5000 × 22%) = $1100 and her suspended credit is ($2100 - $1100) = $1000.