When Kate Died, She Owned a Passive Activity with an Adjusted

question 42

Multiple Choice

When Kate died, she owned a passive activity with an adjusted basis of $100,000.Its fair market value at that date is $130,000.Suspended losses relating to the property were $45,000.

• A)The heir's adjusted basis is $130,000, and Kate's final deduction is $15,000.
• B)The heir's adjusted basis is $130,000, and Kate's final deduction is $45,000.
• C)The heir's adjusted basis is $100,000, and Kate's final deduction is $45,000.
• D)The heir's adjusted basis is $175,000, and Kate has no final deduction.
• E)None of these applies here.

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Definitions:

Draw Key

A type of key, often made of metal, used to secure components together by fitting into a corresponding slot or recess, commonly found in mechanical and engineering applications.

Jam Nut

A type of thin nut used to lock another nut by being tightened against it, mainly in situations where vibration might loosen the nuts.

Kingpin

A central pivot in the steering mechanism of a vehicle, crucial for the steering system.

Snap Rings

Retaining rings inserted into a groove to hold components in assembly, often used in mechanical devices to secure parts in place.