Mara Owns an Activity with Suspended Passive Losses from Prior

question 18

Multiple Choice

Mara owns an activity with suspended passive losses from prior years of $13,000.In the current year,Mara becomes a material participant in the activity.This year the activity generates $6,000 of income.The net effect of this activity on Mara's current year AGI is

• A)an increase of $6,000.
• B)a decrease of $13,000.
• C)0)
• D)a decrease of $7,000.

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Definitions:

Gamblers

Individuals who risk something of value on the outcome of an event with an uncertain result, often with the primary intent of winning additional money or goods.

Regression Toward The Mean

The tendency for extreme or unusual scores or events to fall back (regress) toward the average.

Unusual Scores

Scores that significantly deviate from the norm or average in any type of assessment, indicating atypical performance or results.

Average

A statistical measure representing the central tendency or typical value of a set of numbers, calculated as the sum of the values divided by the number of values.