1. Cletus and Martha Willard own an apartment building which produces a $20,000 loss. The couple have a modified AGI of $225,000.

Cletus is retired and works on the apartment building for 500 hours per year. Martha is a part-time real estate agent and works 300 hours in that business and also works 80 hours on matters concerning the apartment building.

Which statement below characterizes the correct tax treatment for the apartment building?

Cletus and Martha can deduct the loss on the apartment building as real estate professionals. Cletus and Martha cannot deduct the loss on the apartment building Cletus and Martha can deduct the loss on the apartment building because it is a trade/business.

2. Melissa Roberts is an investor in 2 limited partnerships. She does not participate in either one. Partnership A passes out $3000 of ordinary income to her and $400 of interest income. Partnership B passes out $6,000 of ordinary loss to her.

In addition, Melissa owns and operates a two-unit rental that generates $8,000 of loss. Melissa income from sources other than mentioned above is $135,000. What is Melissa's Adjusted Gross Income (AGI)?