Carol Made a Gift to Tim of a Passive Activity

question 28

Multiple Choice

Carol made a gift to Tim of a passive activity (adjusted basis of $50,000, suspended losses of $20,000, and a fair market value of $80,000) .No gift tax resulted from the transfer.

• A)Tim's adjusted basis is $80,000, and he can deduct the $20,000 of suspended losses in the future.
• B)Tim's adjusted basis is $80,000.
• C)Tim's adjusted basis is $50,000, and the suspended losses are lost.
• D)Tim's adjusted basis is $50,000, and he can deduct the $20,000 of suspended losses in the future.
• E)None of these applies here.

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Definitions:

Class Action

A class action is a lawsuit filed by one or more plaintiffs on behalf of a larger group of people who are similarly affected, to address issues common to the entire class.

Physical Presence

The actual, bodily existence of a person or entity in a specific location at a given time.

Internet Sales

Refers to the process of buying and selling goods or services using the internet as the main medium of commerce.

State Taxes

Taxes imposed by individual U.S. states on income, property, sales, or other activities within their jurisdiction.