Josh Has Investments in Two Passive Activities

question 62

Multiple Choice

Josh has investments in two passive activities.Activity A,acquired three years ago,produces income in the current year of $60,000.Activity B,acquired last year,produces a loss of $100,000 in the current year.At the beginning of this year,Josh's at-risk amounts in Activities A and B are $10,000 and $100,000,respectively.What is the amount of Josh's suspended passive loss with respect to these activities at the end of the current year?

• A)$0
• B)$36,000
• C)$40,000
• D)$100,000
• E)None of the above

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Definitions:

Mutually Exclusive

Mutually exclusive is a statistical term describing two or more events that cannot occur simultaneously, often used in decision making or project selection scenarios.

Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of potential investments by calculating the discount rate that makes the net present value of all cash flows from the investment equal to zero.

Straight-Line Depreciation

A calculation for distributing the expense of a tangible asset over its lifespan in uniform annual payments.