Green Corporation Earns Active Income of $50,000 and Receives $40,000

question 102

Multiple Choice

Green Corporation earns active income of $50,000 and receives $40,000 in dividends during the year. In addition, Green incurs a loss of $70,000 from an investment in a passive activity acquired several years ago. Consider the following two statements:
(1) Green's current deduction for passive activity losses is $50,000 if it is a closely held C corporation that is not a personal service corporation.
(2) Green's current deduction for passive activity losses is $0 if it is a personal service corporation. Which of the following answers is correct?

• A) Only statement 1.
• B) Only statement 2.
• C) Both statements 1 and 2.
• D) Neither statement 1 or 2.
• E) None of the above.

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Definitions:

Analyzability

The extent to which a problem or system can be understood and examined through logical investigation.

Structure Follows Strategy

A principle that organizational structure should be designed to facilitate the strategic objectives the organization seeks to achieve.

Coordination

Coordination is the process of organizing activities and resources efficiently and effectively to ensure that an organization's goals are met.

Matrix Structure

An organizational design that combines functional and project-based structures, allowing for more dynamic team allocation and collaboration.