Nell Sells a Passive Activity with an Adjusted Basis of $45,000

question 76

Multiple Choice

Nell sells a passive activity with an adjusted basis of $45,000 for $105,000. Suspended losses attributable to this property total $45,000. The total gain and the taxable gain are:

• A) $60,000 total gain? $105,000 taxable gain.
• B) $10,000 total gain? $15,000 taxable gain.
• C) $60,000 total gain? $0 taxable gain.
• D) $60,000 total gain? $15,000 taxable gain.
• E) None of the above.

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Definitions:

Marginal Utility

The additional utility or satisfaction gained from consuming one more unit of a good or service.

Specific Money Outlay

The exact amount of money expended on purchasing goods and services or on an investment.

Maximizing Utility

The process of allocating resources to obtain the highest possible satisfaction or utility.

Money Income

Refers to the total income received in the form of money, including wages, salaries, and other earnings.