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:

Employment Contract

A formal agreement specifying the terms and conditions under which an employee agrees to perform certain duties for an employer.

Right of First Refusal

A legal right allowing the possessor to initiate a business deal with the owner of an asset, prior to the owner having the right to engage in that deal with another party.

Injunction

A court order requiring an individual to do or cease doing a specific action.

Reformation

A legal process to correct or modify a written agreement or document that inaccurately reflects the parties' intentions due to error or fraud.