If Wendy has rental income of $55,000 and expenses of $80,000, what can she report on her tax return?

In the situation where Wendy has rental income of $55,000 and expenses of $80,000, the way to determine what she can report on her tax return involves looking at the net rental income or loss.

To calculate this, you subtract the total rental expenses from the rental income. Here, Wendy’s total expenses of $80,000 exceed her rental income of $55,000. When you do the calculation:

$55,000 (rental income) - $80,000 (expenses) = -$25,000.

This means Wendy has a net rental loss of $25,000. On her tax return, she can report this loss, which can offset other types of income, subject to certain limitations. This is why the reportable figure is $25,000.

The context around the other options revolves around misunderstanding how to calculate net income or loss. The deductions listed in those options do not accurately reflect the transaction Wendy processed; they do not take into account the total expenses relative to her income. Hence, the correct answer is determined based on the accurate calculation of rental income and expenses leading to a reported loss of $25,000.