Rose Has an Adjusted Gross Income of $130,000

Multiple Choice

Rose has an adjusted gross income of $130,000. Not included in her adjusted gross income is a $15,000 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 is rental real estate and Rose meets the real estate professional exception, she can deduct the $15,000 loss for adjusted gross income.
II.If the activity is rental real estate and Rose is an active participant, she can deduct $5,000 of the 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.