Sabrina owns a small rental apartment building and uses an outside professional management company to look for tenants, handle the leases, make repairs and collect rents. She is not considered as having active participation in the rental property.

During the year, the property generates a $40,000 loss; If she has $110,000 of salary, $10,000 of long-term capital gains and $4,000 dividends from her investment in the Dow Jones index fund, and no additional sources of income or deductions, how much of the $40,000 can she deduct?

Question 9 options:

	Deduct $25,000
	Zero because it is a passive loss and she does not have any other passive income
	Deduct $3,000 against her dividend income
	Deduct $10,000 against the long-term capital gain