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Carter McBride
Carter McBride, Certified Public Accountant (CPA)
Category: Tax
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Experience:  Adjunct Professor
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I figuring modified adjusted gross income to determine

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I figuring modified adjusted gross income to determine passive activity loss limitation on rental real estate with active participation- what sources of income must be counted? IRA Distributions? Social Security?
JA: What's your current age and retirement age?
Customer: 69 retired
JA: Anything else you want the Accountant to know before I connect you?
Customer: No

Hey! I'm Carter, I'm a CPA and can help you out.

Modified adjusted gross income (MAGI) for this purpose is your adjusted gross income figured without the following.

  • Taxable social security and tier 1 railroad retirement benefits.
  • Deductible contributions to individual retirement accounts (IRAs) and section 501(c)(18) pension plans.
  • The exclusion from income of interest from qualified U.S. savings bonds used to pay qualified higher education expenses.
  • The exclusion from income of amounts received from an employer’s adoption assistance program.
  • Passive activity income or loss included on Form 8582.
  • Any rental real estate loss allowed because you materially participated in the rental activity as a Real Estate Professional (as discussed later, under Activities That Aren't Passive Activities).
  • Any overall loss from a publicly traded partnership (see Publicly Traded Partnerships (PTPs) in the Instructions for Form 8582).
  • The deduction allowed for the deductible part of self-employment tax.
  • The deduction for domestic production activities.
  • The deduction allowed for interest on student loans.
  • The deduction for qualified tuition and related expenses.

So start with your AGI and back out anything above.

Let me know if you need anything else. If not, please leave a rating. Thanks!

Customer: replied 17 days ago.
Thanks. So qualified dividends, an IRA distributions would be included in the MAGI figure?

Correct.

Customer: replied 17 days ago.
Would a military pension be excluded from MAGI as passive income similar to railroad pension or social security?
Customer: replied 17 days ago.
Hello?
No it would not unless it's already not taxable.
Customer: replied 17 days ago.
Thank you for your help.
Thanks! Please leave a rating when you get the chance!
Customer: replied 14 days ago.
Hello, I have one more question: RE: above list - is the "Passive activity income or loss included on Form 8582" the loss just for the Tax Year or does it include Prior Year Unallocated Losses?. Thanks
It includes the prior years as well. Please leave a rating when you get the chance!
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