Catfish, Inc How Much of Catfish's Share of Trout's Loss May It

question 55

Multiple Choice

Catfish, Inc., a closely held corporation that is not a PSC, owns a 45% interest in Trout Partnership, which is classified as a passive activity. Trout's taxable loss for the current year is $250,000. During the year, Catfish receives a $60,000 cash distribution from Trout. Other relevant data for Catfish are as follows. $\begin{array}{lr}\text { Net income from operations } & \$ 800,000 \\\text { Dividend income } & 25,000 \\\text { Rent income } & 20,000\end{array}$ How much of Catfish's share of Trout's loss may it deduct in calculating its taxable income?

• A) $0
• B) $20,000
• C) $45,000
• D) $112,500

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Definitions:

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