During the Current Year, Ethan Performs Personal Services as Follows

question 128

Multiple Choice

During the current year, Ethan performs personal services as follows: 800 hours in his information technology consulting practice, 625 hours in a real estate development business, and 510 hours in a condominium leasing operation. He expects that losses will be realized from the two real estate ventures while his consulting practice will show a profit. Ethan files a joint return with his spouse whose salary is $125,000. The income and losses from the following ventures is considered active and not subject to the passive activity loss limitations:

• A) Only the information technology consulting practice.
• B) Only the information technology consulting practice and the real estate development business.
• C) Only the information technology consulting practice and the condominium leasing operation.
• D) All three of the ventures are considered active and not subject to the passive activity loss limitations.
• E) None of the above.

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Definitions:

Par Value

The nominal or face value of a stock or bond, set at the time of its issuance.

Issue Price

The price at which new or existing securities are offered for sale to the public or an individual.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price, often used by investors to assess the income-generating potential of an investment.

Cash Dividends Per Share

A measure of the amount of cash dividends paid out to shareholders per share of common stock.