Mark Has an Adjusted Gross Income of $154,000

Multiple Choice

Mark has an adjusted gross income of $154,000. Not included in his adjusted gross income is a $16,000 loss from a passive activity. Which of the following statements regarding the effect of the passive loss on his adjusted gross income is/are correct?
I.If the activity does not involve rental real estate, he can only deduct the loss as a miscellaneous itemized deduction.
II.If the activity is rental real estate and Mark is an active participant, he can deduct the $16,000 loss for adjusted gross income.
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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.