Sandra Acquired a Passive Activity Three Years Ago

question 75

Multiple Choice

Sandra acquired a passive activity three years ago.Until last year, the activity was profitable and her at-risk amount was $300,000.Last year, the activity produced a loss of $100,000, and in the current year, the loss is $50,000.Assuming Sandra has received no passive income in the current or prior years, her suspended passive loss from the activity is:

• A)$90,000 from last year and $50,000 from the current year.
• B)$100,000 from last year and $50,000 from the current year.
• C)$0 from last year and $0 from the current year.
• D)$50,000 from the current year.
• E)None of the above.

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Definitions:

Purely Competitive

A market structure characterized by a large number of small firms producing identical products, with easy entry and exit from the market, leading to no single firm having control over market price.

Wage Rate

The compensation paid to employees for their labor, typically expressed as an hourly, daily, or piece rate.

Variable Input

A factor of production whose quantity can be changed easily and quickly in the short run to increase or decrease output.

Purely Competitive

A market structure characterized by many small sellers offering identical products, easy entry and exit, and perfect information, leading to price-taking behavior.