Charlie Owns Activity B Which Was Considered a Passive Activity

question 83

Multiple Choice

Charlie owns activity B which was considered a passive activity and generated a $17,000 suspended loss.Charlie increases his involvement with activity B so that this year activity B is not considered passive for Charlie.During this year,activity B produces a $9,000 loss.In addition,Charlie acquires an investment in activity X,a passive activity,this year.Charlie's share of activity X's income is $13,000.Charlie's salary this year is $70,000.As a result,this year Charlie must

• A)offset B's loss carryover against X's current income and carry over $9,000 loss from activity B to next year.
• B)offset B's carryover loss and current loss against X's income first and then offset any remaining loss against salary.
• C)offset B's $9,000 loss against X's $13,000 income and offset B's loss carryover against the remaining $4,000 of X's income.
• D)offset B's current $9,000 loss against his salary and offset B's loss carryover against X's income and carry over $4,000 of loss to next year.

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Definitions:

Knowledge Transfer

The process through which skills, knowledge, technologies, or methods are passed from one individual or organization to another.

Needle-In-A-Haystack Problem

A metaphorical expression referring to the difficulty of finding a specific item or solution in a vast space or among many possibilities.

Knowledge Transfer

The process of sharing knowledge, skills, and expertise among individuals or organizations.

Subsidiaries

Companies that are owned or controlled by another company, known as the parent company or holding company.