With regard to the passive loss rules involving rental real estate activities, which one of the following statements is correct?
- The term “passive activity” includes any rental activity without regard as to whether or not the taxpayer materially participates in the activity.
- Gross investment income from interest and dividends not derived in the ordinary course of a trade or business is treated as passive activity income that can be offset by passive rental activity losses when the “active participation” requirement is not met.
- Passive rental activity losses may be deducted only against passive income, but passive rental activity credits may be used against tax attributable to non-passive activities.
- The passive activity rules do not apply to taxpayers whose adjusted gross income is $300,000 or less.