Shaheen Owns 2 Rental Properties

Multiple Choice

Shaheen owns 2 rental properties. She hires her 21 year old son, who is a junior at State College, to obtain tenants, negotiate leases, make arrangements for repairs, and pay expenses related to the properties.
I.Shaheen's sale of the properties will result in a capital gain or loss.
II.Shaheen's sale of the properties at a loss results in a current-year loss deduction of no more than $3,000.
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A) Only statement I is correct.
B) Only statement II is correct.
C) Both statements are correct.
D) Neither statement is correct.