Lee, a married individual, is an employee with three rental properties in which Lee does not actively participate. In 2016, Property 1 had a net loss of $10,000, Property 2 had a net gain of $25,000, and Property 3 had a net loss of $5,000. Lee’s W–2 income in 2016 was $110,000. Considering only the foregoing facts, what is Lee’s 2016 adjusted gross income?

a. $120,000

b. $125,000

c. $110,000

d. $135,000