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

$1,500.

$25,000.

None of the choices are correct.

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

$23,500.