Kate has wages of $70,000 and a $15,000 income from a partnership. How much of her rental loss can she use to offset her nonpassive income?

To determine how much of Kate's rental loss can be used to offset her nonpassive income, it is essential to understand the rules surrounding passive activity losses and nonpassive income.

Rental losses are generally categorized as passive losses, which means they can only offset passive income unless specific criteria are met. In many cases, taxpayers can deduct up to $25,000 in passive losses against nonpassive income if their modified adjusted gross income is below $100,000. However, for every dollar of income above this threshold, the passive loss deduction begins to phase out.

In Kate's scenario, she has a total income composed of wages ($70,000) and income from a partnership ($15,000), constituting $85,000 in nonpassive income. If we assume Kate has a rental loss of $15,000, she could potentially offset a portion of this loss against her nonpassive income.

Given that her total income is below the $100,000 threshold, she is eligible to offset up to $25,000 of her rental losses against her nonpassive income. However, the specific amount she can deduct may have some limitations based on her situation.

The IRS rules dictate that while she can use part of