Help, please! I don’t understand passive activity losses...

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I need to read more carefully

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Study question asks: Maria received $40,000 in wages, husband had net gain of $8,500 on passive partnership interest. Husband also had $35,000 loss front rental real estate activity in which he actively participates. How much rental loss can they deduct?
The answer given is $33,500: “Since the husband actively participates in the rental real estate activity, he may offset the $8,500 of passive income with the passive loss and deduct an additional $25,000 of his wife’s income.” Are they saying married taxpayers get to apply the $25,000 limitation twice? I’m so confused, because the way I read the study material, the $25,000 would offset the $8,500 gain, and so the taxpayers would be able to deduct $25,000 - $8,500, or $16,500.

By George I think I just got it. Use the $35,000 first to deduct passive income, then the $25,000 limit applies. So, passive gain is deducted regardless of the $25,000 limit, then when it comes to active income the $25,000 kicks in. (Hope I’m making sense 😩)

You got it!

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