Which of the following individuals will be able to deduct the described losses in full in the current year?MAKE SURE YOU GO THROUGH THE CHAPTER 11 NOTES AND SOLUTIONS TO THE CHAPTER 11 HANDOUT!!

Check all that apply!!!

Question options: ( choose the first and second at some time is incorrect )

Chuck who has a $5,000 loss from a limited partnership interest.His other income is $120,000 from wages and $8,000 from rental income on a duplex he owns.

Sherry, a materially participating sole proprietor with basis and amounts at risk of $60,000.She has a $10,000 loss from her sole proprietorship.

Clyde who has income of $90,000 from self-employment, $5,000 of dividends, and a $3,000 loss from a limited partnership interest where he is just an investor in the partnership.

Sally who has a $1,500 current loss and a $3,000 suspended loss from a limited partnership interest in TDK Realty Partners (she is only an investor).She has no other passive activity.She sells TDK in the current year for a $2,500 gain.

Cletus and Martha Willard own an apartment building which produces a $20,000 loss.The couple have a modified AGI of $225,000.

Cletus is retired and works on the apartment building for 500 hours per year.Martha is a part-time real estate agent and works 300 hours in that business and also works 80 hours on matters concerning the apartment building.

Which statement below characterizes the correct tax treatment for the apartment building?SEE BOTH PROVISIONS RELATING TO RENTAL REAL ESTATE IN THE CHAPTER 11 NOTES AND HANDOUT (SPECIAL PASSIVE ACTIVITY LOSS ALLOWANCE FOR RENTAL REAL ESTATE WITH ACTIVE PARTICIPATION AND WHEN RENTAL REAL ESTATE IS PART OF A TRADE OR BUSINESS FOR REAL ESTATE PROFESSIONALS)

Question options:

Cletus and Martha can deduct the loss on the apartment building as real estate professionals.

Cletus and Martha cannot deduct the loss on the apartment building

Cletus and Martha can deduct the loss on the apartment building because it is a trade/business.