1.

Which of the following would be treated as passive activity income under the passive activity loss rules?

		Dividend income from a taxpayer's investment portfolio.
		Income from a taxpayer's limited partnership interest.
		Commissions received from selling vacation property.
		Rental income from real estate in which the taxpayer materially participated as a real estate professional.

2.

Martha, who is single, has a main home in Houston. In the current year, she rented it for 10 days, receiving $5,000 in rental income. Martha paid $20,000 in mortgage interest and $10,000 in real estate taxes on her home in the current year. What is the net effect of these items on her adjusted gross income?

		$0
		$5,000 increase
		$5,000 decrease
		$25,000 decrease
		$30,000 decrease

3.

Pat is a CPA. In the current year, he spent 1,200 hours working in his accounting practice and earned a net income of $300,000. He also spent 1,250 hours materially participating in various real estate projects. His net loss from these projects was $60,000. Pat also has gambling losses of $10,000 and gambling income of $7,000 for the current year. Ignoring self-employment taxes, what is Pats adjusted gross income (AGI) for the year?

		$247,000
		$307,000
		$240,000
		$237,000