Tom and Shawn Own All of the Outstanding Stock of Brady

question 604

Multiple Choice

Tom and Shawn own all of the outstanding stock of Brady Corporation (a retail store operated as a C corporation) . This year, Brady generates taxable income of $20,000 from active business operations, and also reports investment interest income of $22,000 and losses of $28,000 from a passive activity. As a result, Brady Corporation reports

• A) business income of $20,000 and a passive loss carryover of $6,000.
• B) net income of $42,000.
• C) business income of $20,000, interest income of $22,000, and a passive loss carryover of $28,000.
• D) interest income of $22,000 and a passive loss carryover of $8,000.

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