If a Taxpayer Has the Following for the Current Year

question 77

Multiple Choice

If a taxpayer has the following for the current year:
$\begin{array}{lrrr}&\text { Active } & \text { Portfolio } & \text { Passive } \\&\text { Income }&\text { Income }&\text { Income }\\\text { Income } & \$ 75,000 & \$ 22,000 & \$ 55,000 \\\text { Deductions }&(45,000) &(16,000) &(110,000) \\\text { Income(Loss) } & \$ 30,000 & \$ 6,000 & \$(55,000) \end{array}$
I.If the taxpayer is a regular corporation,taxable income from the three activities is a loss of $19,000.
II.If the taxpayer is an individual and the passive income is related to a rental real estate activity in which the taxpayer is an active participant,taxable income is $11,000.

• A)Only statement I is correct.
• B)Only statement II is correct.
• C)Both statements are correct.
• D)Neither statement is correct.

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Definitions:

Par Value

The nominal or face value of a bond, share of stock, or coupon as indicated on a bond or stock certificate.

Semi-Annually

Semi-annually refers to an event or action occurring twice a year, typically every six months.

Real Rate Of Return

The yearly return percentage on an investment, modified for price level changes caused by inflation or other external factors.

Nominal Rate

The nominal rate is the interest rate set by the lending institution, not adjusted for inflation, representing the face value of the interest rate.