When a Taxpayer Experiences a Net Loss from a Nonresidence

question 59

Multiple Choice

When a taxpayer experiences a net loss from a nonresidence (rental property) :

• A)the taxpayer will not be allowed to deduct the loss under any circumstance if the taxpayer does not have passive income from other sources.
• B)the loss is fully deductible against the taxpayer's ordinary income no matter the circumstances.
• C)if the taxpayer is not an active participant in the rental, the taxpayer may be allowed to deduct the loss even if the taxpayer does not have any sources of passive income.
• D)if the taxpayer is not allowed to deduct the loss due to the passive activity loss limitations, the loss is suspended and carried forward until the taxpayer generates passive income or until the taxpayer sells the property.

---

Definitions:

Sales Mix

Sales mix is the proportion of different products or services that a company sells, reflecting the variety of sales contributing to total revenue.

Units Sold

The total quantity of products or goods sold by a company during a specific period.

Relevant Range

The scope of activity levels within which the assumptions about fixed and variable costs in cost-volume-profit analysis remain valid.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted, indicating how much contributes to covering fixed costs and profit.