Loren Owns Three Passive Activities That Had the Following Results

question 71

Multiple Choice

Loren owns three passive activities that had the following results for the current year:
$\begin{array}{ll}\text { Passive Activity A } & \$ 25,000 \\\text { Passive Activity B } & (10,000) \\\text { Passive Activity C } & (40,000) \end{array}$
If none of the passive activities are rental real estate activities,what is the amount of suspended loss attributable to Activity C?

• A)$ - 0 -
• B)$18,750
• C)$20,000
• D)$25,000
• E)$40,000

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Definitions:

Direct Labor-Hours

The number of labor hours spent by employees directly working on the production of goods or services.

Casting

A manufacturing process where a liquid material is poured into a mold, which contains a hollow cavity of the desired shape, and then allowed to solidify.

Assembly

The phase in manufacturing where components are put together to form a final product.

Predetermined Overhead Rates

Rates used to allocate manufacturing overhead costs to products or job orders, calculated based on estimated costs and activity levels.