Question

1. Jana reports the following income and loss: Salary $ 120,000 Income from activity A 60,000...

1. Jana reports the following income and loss:

Salary

$ 120,000

Income from activity A

60,000

Loss from activity B

(30,000)

Loss from activity C

(70,000)

Activities A, B, and C are all passive activities.

Based on this information, Jana has the following suspended losses

A)

Activity B

Activity C

$30,000

$70,000

B)

Activity B

Activity C

$0

$0

C)

Activity B

Activity C

$18,000

$42,000

D)

Activity B

Activity C

$12,000

$28,000
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Homework Answers

Answer #1

Answer:

Pasive losses are only offset by passive income, not income from stocks bond, interest and dividends. Also passive loss can be carry forward indefinetly until either of two thing happen: you have rental income or other passive income, you can deduct them against.

Option D is correct

Loss form activiy B and C are adjusted from income form Activity A.

Rest of loss are Activity B = $ 12,000

Activity C = $ 28,000

Total Income = Income from salary i.e. ($120,000)

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