FOR 2022:

Michelle is an active participant in the rental condominium property she owns. During the year, the property generates a ($16,700) loss; however, Michelle has sufficient tax basis and at-risk amounts to absorb the loss. If Michelle has $116,700 of salary, $13,400 of long-term capital gains, $3,850 of dividends, and no additional sources of income or deductions, how much loss can Michelle deduct?

A) Zero; losses from rental property are passive losses and can only be offset by passive income.

B) $3,575.

C) $8,025.

D) $16,700.

E) None of the choices are correct