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

question 1

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 these.

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Definitions:

Intrinsic Value

The actual value of a company or an asset based on underlying perception of its true value including all aspects of the business, in terms of both tangible and intangible factors.

D1

Often used in dividend discount models, it represents the expected dividend per share for the next year.

Dividend Per Share

The amount of dividend that a company pays out to its shareholders for each share they own.

Return on Equity

An indicator of a company's financial performance, showing the amount of profit generated per dollar of shareholders' investment.