Katrina is the sole owner of rental real estate that produces a net loss of $18,000 in 2010 and $22,000 in 2011 and income of $9,000 in 2012. Her adjusted gross income, before considering the rental property for the years 2010 through 2012, is $115,000, $137,000, and $88,000, respectively.
a. What is Katrina’s adjusted gross income for 2010, 2011, and 2012 if she qualifies as a real estate professional?
b. What is Katrina’s adjusted gross income for 2010, 2011, and 2012 if she actively participates in the rental activity?