Nancy Reports the Following Income and Loss in the Current

question 17

Multiple Choice

Nancy reports the following income and loss in the current year. All three activities are passive activities with respect to Nancy. Nancy also has $21,000 of suspended losses attributable to activity C carried over from prior years. During the year, Nancy sells activity C and realizes a $15,000 taxable gain. What is Nancy's AGI as a result of these transactions?

• A)$50,000
• B)$55,000
• C)$64,000
• D)$71,000

---

Definitions:

Compensatory Damages

Monetary damages awarded to a plaintiff to compensate for actual loss or injury.

American Institute of Certified Public Accountants

A national professional organization for Certified Public Accountants (CPAs) in the United States, focused on setting ethical standards and auditing procedures.

GAAS

Stands for Generally Accepted Auditing Standards, which are the guidelines auditors follow to ensure their audits are conducted objectively and consistently.

Privity or Near-Privity Rule

A legal principle requiring a close, direct relationship between the parties involved in a contract for a third party to have the right to sue.