What Is the Amount of the Change in Stockholders' Equity

question 9

Multiple Choice

What is the amount of the change in stockholders' equity in the year 2013?

• A)$5,750 increase.
• B)$700 decrease.
• C)$6,300 decrease.
• D)$550 increase.

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Definitions:

Passive Activity

Economic activities in which the taxpayer does not materially participate, like rental property, often with distinct tax rules.

Suspended Passive Losses

Losses from passive activities that exceed income from passive activities, which cannot be deducted in the current year and must be carried forward to future tax years.

At-Risk

The at-risk rules limit the amount of loss a taxpayer can claim to the amount actually at risk in the investment activity.

Form 6198

An IRS form used by taxpayers to determine the amount of at-risk activities loss that is deductible for the tax year.