Rhonda needs your advice. Provide an answer to Rhonda's question as to whether either of the investment strategies in year 2 help her situation. You can also identify another option for her investment of $25,000. For each part compute the losses that can be deducted each year, the balance of the deferred losses (if any), and a summary of the amounts invested and the losses taken. Make a schedule to summarize this using the template attached here, also in D2L Content - Notes. (The schedule will provide support for your recommendation.)

Strategy a. Assume that Rhonda invested $9,000 in this (passive activity) entity in year 0. Rhonda's share of the year 0 loss was 1,500. This should bring you to the initial status in the problem in the text. As with the problem, assume that Rhonda's share of the loss was 12,000 in year 1. Then go forward from this point and assume that in year 2, Rhonda invests an additional $25,000 in year 2 (to address the basis limitation rule) and the entity generates another $12,000 loss (her share). Does this help Rhonda? What are her ending balances?

Strategy b. Begin as in part a. Assume that Rhonda invested 9,000 in this (passive activity) entity in year 0. Rhonda's share of the year 0 loss was 1,500. This should bring you to the initial status in the problem in the text. As with the problem, assume that Rhonda's share of the loss was 12,000 in year 1. Then go forward from this point and assume that in year 2, Rhonda invests an additional $15,000 into this entity and also invests another $10,000 into a different entity that generates $5,000 of passive income? Does that help Rhonda? What are her ending balances?

Other strategy -- is there a better approach for her to invest the $25,000?