Ronaldo receives a Schedule K-1 from a family business that he does not actively participate in. On it, he shows interest income of $245 and dividends of $681. The Schedule K-1 also includes $275 in annuities. Ronaldo also has a passive loss of $1,721 from another business. Can he offset the loss with the Schedule K-1 income?

No, he cannot offset passive losses using investment income unless there is enough gain to wipe the loss out completely.

Yes, he can offset $926 of the loss using the interest and dividends, but not the annuities.

No, he cannot offset passive losses with portfolio income.

Yes, he can offset $1,201 of the loss using the investment income.