If a Taxpayer Sells a Passive Activity with Suspended Passive

question 68

Multiple Choice

If a taxpayer sells a passive activity with suspended passive activity losses from prior years, what type of income can generally be offset by the suspended passive losses in the year of sale?

• A)Passive activity income
• B)Portfolio income
• C)Active business income
• D)Any of these types of income can be offset
• E)None of the choices are correct. The suspended losses disappear when the passive activity is sold.

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Definitions:

Grade 12

The final year of secondary school in many educational systems, often associated with preparing for college or university entry.

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The length of time that a person or object has existed, typically measured in years.

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Describing a distribution that has a single mode or peak.

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A term describing a distribution that is not symmetrical, where one of its tails is longer than the other, indicating a deviation from the normal distribution.