Josh Has Investments in Two Passive Activities

question 72

Multiple Choice

Josh has investments in two passive activities.Activity A, acquired three years ago, produces income in the current year of $60,000.Activity B, acquired last year, produces a loss of $100,000 in the current year.At the beginning of this year, Josh's at-risk amounts in Activities A and B are $10,000 and $100,000, respectively.What is the amount of Josh's suspended passive activity loss with respect to these activities at the end of the current year?

• A)$0
• B)$36,000
• C)$40,000
• D)$100,000
• E)None of these

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Definitions:

Fixed Policy Rules

Strategies or regulations in economic policy that remain constant and do not change in response to fluctuations in the macroeconomic environment.

Discretionary Macro Policy

Economic policies based on the judgement of policymakers rather than set rules, involving adjustments in government spending and taxes to influence the economy.

Inflation

The increase in the average price of goods and services over time, detracting from the effective purchasing capacity.

Recession

A recession is a period of economic decline across a broad spectrum of the economy lasting more than a few months, typically visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.