Michelle is an active participant in the rental condominium property she owns. During the year, the property generates a $($ $$25,000)$ loss; however, Michelle has

sufficient tax basis and at$-$risk amounts to absorb the loss. If Michelle has $$130,000$ of salary, $$12,000$ of long$-$term capital gains, $$5,000$ of dividends, and no

additional sources of income or deductions, how much loss can Michelle deduct?

Multiple Choice

$$0$; losses from rental property are passive losses and can only be offset by passive income.

$$23,500$

$$1,500$

$$25,000$

None of the choices are correct.