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****** Scenario 3: Section 469 Passive Activity Losses Deep Dive ...

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Accounting

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Scenario 3: Section 469 Passive Activity Losses Deep Dive
Taxpayer owns several rental properties that generate losses of $60,000 in total.
Investor has other income:
Wages: $200,000
Interest and Dividend Income: $5,000
Actively participates in one rental property, but not the others.
Itemized Deductions: $36,000
Allowable deduction for self-employment tax: None
Calculate:
How much of the rental losses are potentially deductible under Section 469 rules.
AGI, Taxable Income, and Total Tax Liability
Analyze the difference between "active participation" and "material participation".

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