2. Susan is the owner of a 35-unit apartment complex. She spends 950 hours a year managing the property. In addition, she works part-time for a mortgage company. She spends 1,150 hours a year as a bookkeeper at the mortgage company. The apartment complex generated a loss of $32,000, and Susan's adjusted gross income for the current year, before considering the apartment complex, is $48,000. How much of the loss can Susan deduct?

a. $- 0 - b. $14,476 c. $16,727 d. $25,000 e. $32,000

3. Karl has the following income (loss) during the current year: Net business income $45,500 Dividends and interest 12,000 Actively managed rental property (34,000) What is Karl's adjusted gross income for this year?

a. $23,500 b. $31,400 c. $32,500 d. $45,500 e. $57,500

4. Ricardo owns interests in 3 passive activities: A, B, and C. During the current year, activity A realizes income of $8,000 while activities B and C realize losses of $16,000 and $24,000, respectively. Determine the amount of suspended loss attributable to activity C.

a. $- 0 - b. $ 8,000 c. $12,800 d. $19,200 e. $24,000

5. "Active participation" and "real estate professional" are both exceptions to the general rule for passive activity losses with rental real estate.

I. One of the tests that an individual must meet to qualify as a real estate professional is that the taxpayer spends more than 50% of his/her time in real property trades or businesses.

II. A taxpayer with an AGI of $190,000 qualifying under the real estate professional exception may deduct an unlimited amount of rental real estate losses.

a. Only statement I is correct. b. Only statement II is correct. c. Both statements are correct. d. Neither statement is correct.

6. Melinda and Riley are married taxpayers. During the year, they completed a single capital asset sale in which a loss of $120,000 is realized on the sale ($15,000 amount realized, less $135,000 adjusted basis) of qualified small business stock. How much of the loss can the taxpayers deduct?

a. $3,000 b. $53,000 c. $100,000 d. $103,000 e. $120,000