LO.8, 11 Robert owns rental property that generally produces positive taxable income and cash flow. This year, however, Robert’s current loss is $5,000. Before considering the effect of the depreciation deduction, however, the property would have generated a

$1,500 profit. Robert’s AGI for the year is $170,000. He asks you about the treatment of his loss for the current year. Robert also mentions that he has been considering selling the property (within the next five years) or exchanging it for other rental property.

Identify the tax issues.