The following chart applies to Bettelli, an investor who owns two rental activities, Property A and Property B, and has no other involvement in passive activities:

Bettelli met the requirements for active participation in year 1 but not in year 2. Bettelli’s AGI in year 1 was $140,000; in year 2, $180,000. In year 3, Bettelli sells Property A for a $15,000 gain. How much of the gain must Bettelli report on Bettelli’s year 3 tax return?

a. $0

b. $3,000

c. $8,000

d. $13,000

Transcribed Image Text:

Property Income (Loss) Year 1 A ($12,000) B 5,000 Year 2 A (6,000) B 1,000