Michelle is an active participant in the rental condominium property she owns. During the year, the property generates a ($23,000) loss; however, Michelle has sufficient tax basis and at-risk amounts to absorb the loss. If Michelle has $131,000 of salary, $11,600 of long-term capital gains, $4,600 of dividends, and no additional sources of income or deductions, how much loss can Michelle deduct?

Multiple Choice

• $23,000.

• $1,400.

• None of the choices are correct.

• $21,600.

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